(1) Unless otherwise agreed tender of payment is a condition to the seller's duty to tender and complete any delivery.

(2) Tender of payment is sufficient when made by any means or in any manner current in the ordinary course of business unless the seller demands payment in legal tender and gives any extension of time necessary to procure it.

(3) Subject to provisions of the Uniform Commercial Code on the effect of an instrument on an obligation (Section 55-3-310 NMSA 1978), payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.

History: 1953 Comp., § 50A-2-511, enacted by Laws 1961, ch. 96, § 2-511; 1992, ch. 114, § 7.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Prior uniform statutory provision. — Section 42, Uniform Sales Act.

Changes. — Rewritten by this section and Section 2-507.

1. The requirement of payment against delivery in Subsection (1) is applicable to noncommercial sales generally and to ordinary sales at retail although it has no application to the great body of commercial contracts which carry credit terms. Subsection (1) applies also to documentary contracts in general and to contracts which look to shipment by the seller but contain no term on time and manner of payment, in which situations the payment may, in proper case, be demanded against delivery of appropriate documents.

In the case of specific transactions such as C.O.D. sales or agreements providing for payment against documents, the provisions of this subsection must be considered in conjunction with the special sections of the article dealing with such terms. The provision that tender of payment is a condition to the seller's duty to tender and complete "any delivery" integrates this section with the language and policy of the section on delivery in several lots which call for separate payment. Finally, attention should be directed to the provision on right to adequate assurance of performance which recognizes, even before the time for tender, an obligation on the buyer not to impair the seller's expectation of receiving payment in due course.

2. Unless there is agreement otherwise the concurrence of the conditions as to tender of payment and tender of delivery requires their performance at a single place or time. This article determines that place and time by determining in various other sections the place and time for tender of delivery under various circumstances and in particular types of transactions. The sections dealing with time and place of delivery together with the section on right to inspection of goods answer the subsidiary question as to when payment may be demanded before inspection by the buyer.

3. The essence of the principle involved in Subsection (2) is avoidance of commercial surprise at the time of performance. The section on substituted performance covers the peculiar case in which legal tender is not available to the commercial community.

4. Subsection (3) is concerned with the rights and obligations as between the parties to a sales transaction when payment is made by check. This article recognizes that the taking of a seemingly solvent party's check is commercially normal and proper and, if due diligence is exercised in collection, is not to be penalized in any way. The conditional character of the payment under this section refers only to the effect of the transaction "as between the parties" thereto and does not purport to cut into the law of "absolute" and "conditional" payment as applied to such other problems as the discharge of sureties or the responsibilities of a drawee bank which is at the same time an agent for collection.

The phrase "by check" includes not only the buyer's own but any check which does not effect a discharge under Article 3 (Section 3-802). Similarly the reason of this subsection should apply and the same result should be reached where the buyer "pays" by sight draft on a commercial firm which is financing him.

5. Under Subsection (3) payment by check is defeated if it is not honored upon due presentment. This corresponds to the provisions of article on commercial paper. (Section 3-802). But if the seller procures certification of the check instead of cashing it, the buyer is discharged. (Section 3-411).

6. Where the instrument offered by the buyer is not a payment but a credit instrument such as a note or a check postdated by even one day, the seller's acceptance of the instrument insofar as third parties are concerned, amounts to a delivery on credit and his remedies are set forth in the section on buyer's insolvency. As between the buyer and the seller, however, the matter turns on the present subsection and the section on conditional delivery and subsequent dishonor of the instrument gives the seller rights on it as well as for breach of the contract for sale.

Point 1: Sections 2-307, 2-310, 2-320, 2-325, 2-503, 2-513 and 2-609.

Point 2: Sections 2-307, 2-310, 2-319, 2-322, 2-503, 2-504 and 2-513.

Point 3: Section 2-614.

Point 5: Article 3, esp. Sections 3-802 and 3-411.

Point 6: Sections 2-507, 2-702, and Article 3.

"Buyer". Section 2-103.

"Check". Section 3-104.

"Dishonor". Section 3-508.

"Party". Section 1-201.

"Reasonable time". Section 1-204.

"Seller". Section 2-103.

The 1992 amendment, effective July 1, 1992, substituted "the Uniform Commercial Code" for "this act" and "55-3-310 NMSA 1978" for "3-802" in Subsection (3).

Law reviews. — For article, "Buyers and Sellers of Goods in Bankruptcy," see 1 N.M. L. Rev. 435 (1971).

Am. Jur. 2d, A.L.R. and C.J.S. references. — Entirety or divisibility of contract as affecting time of payment, 2 A.L.R. 677.

Authority of agent to receive payment for commodities which he is authorized to sell, or for which he is to find market, 8 A.L.R. 203, 105 A.L.R. 718.

Right of purchaser to opportunity to pay in cash where tender has been made in other medium, 11 A.L.R. 811, 23 A.L.R. 630, 46 A.L.R. 914.

Dishonor of draft or check for purchase price on a cash sale as affecting sellers' rights in respect of property or its proceeds, 31 A.L.R. 578, 54 A.L.R. 526.

Option to pay purchase price in cash or on terms, 36 A.L.R. 857.

Acceptance of draft for purchase price with warehouse receipt attached or by transfer of draft with receipt as passing title to goods, 55 A.L.R. 116, 76 A.L.R. 885, 109 A.L.R. 1381.

Right of purchaser in making tender to deduct from agreed purchase price amount of obligations which it is the vendor's duty to satisfy, 173 A.L.R. 1309.

In absence of written provision in sales contract, place where cash consideration for goods purchased is payable, 49 A.L.R.2d 1350.

Conclusiveness of determination of third party whose approval is provided for by contract for sale of goods, 7 A.L.R.3d 555.

77A C.J.S. Sales § 208 et seq.; 86 C.J.S. Tender § 21.