Specific performance is an equitable remedy in contract law that allows a court to compel a breaching party to fulfill their obligations under the agreement. In plain English, a judge can order the actual performance of the contract instead of just providing monetary damages.
It may be granted when money cannot truly make the non-breaching party whole, such as for contracts involving unique property like land, or artwork, or where an ongoing service is required. It is an important tool in contract law that gives courts flexibility to craft remedies tailored to the specific situation and provide full relief for the injured party.
Legal Basis For Granting Specific Performance
It is an equitable contractual remedy that allows courts to compel a breaching party to fulfill their contractual obligations. The legal basis for granting particular performances stems from the fact that monetary damages are not always an adequate or appropriate remedy for breach of contract.
In common law jurisdictions like the United States and the United Kingdom, specific performance is an inherent power of courts of equity. This means that if damages cannot fully compensate the non-breaching party, a court can order the actual performance of the contract.
The underlying rationale is that the subject matter of certain contracts is considered unique such that monetary damages cannot make the innocent party whole. For example, contracts involving the sale of land, artwork, antiques, or personal property with sentimental value.
Specific performance is also available for contractual obligations that are purely affirmative, like construction contracts. In these cases, the equitable remedy achieves what the legal remedy of monetary damages cannot it ensures that the non-breaching party receives the benefit of their contractual bargain.
Criteria For Granting Specific Performance
While courts have broad discretion to order specific performances, there are certain criteria they consider:
- Uniqueness: As mentioned, the subject matter of the contract must be unique in that damages are an inadequate remedy. The land is considered inherently distinctive.
- Certainty: The terms of the contract must be clear, definite, and free from ambiguity. Vague or uncertain contracts cannot be specifically enforced.
- Possibility of performance: The breach party must have the ability to comply with an order of specific performance. For example, if performance has become objectively impossible, specific performance will not be granted.
- Mutuality of remedy: Both parties must be capable of securing specific performance. If only one party could seek this remedy while the other is limited to damages, the equitable remedy may not be granted.
- Adequacy of consideration: The consideration given in the contract must be adequate and reflect the reasonable value of what was to be exchanged. Courts want to avoid unfairly enforcing sweetheart deals through specific performance.
- The behavior of the parties: A party’s breaches, delays, or other conduct in bad faith may preclude them from obtaining performance as a remedy. Courts consider both sides’ behavior.
Limitations and Discretion of the Court
Even when the criteria for specific performances are met, courts still maintain discretion over whether to grant the remedy. Specifically:
- Laches: If the non-breaching party unreasonably delayed in seeking specific performance after the breach, the equitable defense of laches may prevent the remedy.
- Balancing of hardships: Courts balance the hardships imposed on both parties. If a specific performance would cause disproportionate injury to the breaching party compared to the damages remedy, the court may refuse to order it.
- Impossibility: As noted, if performance has become objectively impossible, specific performance is unavailable. This includes legal or physical impossibility.
- Public policy: Courts will not issue orders that are risky, dangerous, or contrary to public policy. For example, involuntary personal service contracts are rarely enforced.
- Adequacy of legal remedies: Specific performance is a remedy of last resort. If damages or other legal remedies like restitution would sufficiently compensate the non-breacher, a court may not order performance.
Examples of Specific Performance: Case Law
Case law provides helpful examples of when courts have granted or denied specific performance. In Snell v. Mitchell (1939), the court ordered specific performance of a land sale contract. The land was found to be unique as each parcel of land differs in location, soil composition, and surroundings.
In Cumberland Glass Mfg. v. De Witt (1889), specific performance was denied for a requirements contract to supply all glass needs for some time. Compliance would have required ongoing judicial oversight, which equity courts aim to avoid.
One famous case is Walsh v. Barton (1909), where Specific performance was granted to compel an author to deliver the manuscript of a book. This unusual order illustrates how equity focuses on substance over form and will tailor remedies appropriately.
Alternative Remedies for a Breach of Contract
While specific performance is a powerful remedy, it is not the only option available to an aggrieved party for a contractual breach. Some other common alternatives include:
- Damages: As the default remedy, damages compensate for losses in monetary terms. They can be compensatory or liquidated.
- Restitution: Focuses on restoring any benefits conferred rather than losses suffered. For example, if partial performance was rendered, restitution recovery undoes the benefit gained from the breach.
- Reformation: Used for cases involving mutual mistakes or unintended terms. The court reforms the contract to reflect the true intentions and agreement of the parties.
- Rescission: Cancels or terminates the contract, returning parties to their pre-contract positions. It is an equitable remedy for issues like misrepresentation, illegality, or frustration of purpose.
- Reliance Damages: Compensates for out-of-pocket expenditures made in reasonable reliance on the contract. Awards are limited to actual costs incurred rather than expected gains.
- Liquidated Damages: A pre-determined sum stipulated in the contract itself as the measure of damages if a breach occurs. Must be a genuine pre-estimate of harm.
FAQs
The injured party is generally expected to send a formal demand or default notice to the breaching party providing a deadline to cure before commencing a lawsuit. This preserves their right to claim specific performance later if needed.
If a party does not voluntarily comply, courts can hold them in contempt. Remedies include fines or even jail time to coerce obedience. The order can also be enforced against third parties like landlords or employers who aid in non-compliance.
Yes, like other civil orders, the availability of appeal is an important safeguard against potential judicial overreach. Appellate courts carefully review whether the trial judge properly exercised their discretion.
Privity requires that only the original contracting parties have legal standing to sue each other over the agreement. Third parties generally cannot seek specific performance. An exception is when they are intended beneficiaries expressly designated as having enforcement rights.
