The Collapsing Deal
Deals collapse for a variety of reasons. In such a situation, your client will want to know if the contract is enforceable (either by them, if they wish to enforce the deal, or against them if they are trying to get out of it). You must direct your mind to whether the contract is firm and binding with no terms left to be settled. Sometimes the parties have reached only an agreement in principle with certain key elements left to be settled. In such a case, you need to confirm your client's intentions and, where possible, shore up any component that is meant to be presently binding. Often, commercial realtors or business agents provide financing clauses that are uncertain for lack of specificity or fail to remove subjects in a timely fashion, leaving the enforceability of the rest of the agreement in jeopardy.
Tendering is the attempt by a party to perform its obligations on time, either to pay the money or to transfer property, under a contract where time is of the essence. Tendering provides evidence that the party is ready, willing and able to perform those obligations at the time they must perform them. This is essential if your client wishes to seek the remedy of specific performance except in the case of a specific repudiation. Tendering must be made personally on the other party unless the contract specifically provides or allows otherwise.
Care must be taken when advising your client about what they can and cannot do as a transaction approaches closing. Courts have found, for example, that failure to disclose significant information to the other party in a timely fashion can eliminate the other party’s obligation to tender by a particular deadline – a vendor may be precluded from relying upon the provision making time of the essence when it has not acted in good faith in its performance of the contract.
Remember, when a deal begins to collapse, it often appears that the problems will be worked out. Tender in any event to preserve your client’s rights. Even in the case of an anticipatory breach where one party has clearly indicated an intention not to complete, a party seeking to keep the contract alive must take care to establish readiness, willingness, and ability to complete at the time fixed for completion.