Specific performance

Topic

Specific Performance in Contract Law

Specific performance is an equitable remedy that compels a party to perform their contractual obligations as agreed. This remedy is typically granted when damages are inadequate to compensate the injured party, particularly in cases involving unique or irreplaceable items, such as real estate or rare goods. Specific performance ensures that the non-breaching party receives the exact performance promised under the contract.

When Specific Performance is Granted

Specific performance is not automatically available; it is a discretionary remedy granted under certain conditions:

  • Inadequacy of Damages: Specific performance is often granted when damages would not be an adequate remedy, such as in contracts involving unique items or real property.
  • Definiteness of Terms: The contract must be sufficiently certain and clear in its terms, allowing the court to enforce specific performance without ambiguity.
  • Fairness and Equity: The remedy will only be granted if it is fair and equitable to both parties, considering factors like hardship or inequitable behavior.
  • Feasibility of Enforcement: The court must be able to supervise and enforce the performance, ensuring that it is practically feasible to compel the breaching party to fulfill their obligations.

Limitations and Defenses

There are several limitations and defenses to the granting of specific performance:

  • Personal Service Contracts: Specific performance is generally not available for contracts involving personal services, as it would compel an individual to work against their will.
  • Mutuality of Obligation: Both parties must have mutual obligations that can be specifically enforced; a lack of mutuality may prevent the remedy from being granted.
  • Unclean Hands: The party seeking specific performance must have acted equitably, with "clean hands." If they have engaged in misconduct, the court may deny the remedy.
  • Laches: Delay in seeking specific performance can be a bar to the remedy if the delay has prejudiced the other party or made performance impractical.

Case Law

Specific Performance - Sky Petroleum Ltd v VIP Petroleum Ltd (1974)

In this case, the court granted specific performance for the supply of petrol, as the contract involved a unique supply at a time of shortage, and damages were deemed inadequate to compensate for the breach.

Real Property - Verrall v Great Yarmouth Borough Council (1981)

The court ordered specific performance for a lease agreement, emphasizing that real property is considered unique, making damages an inadequate remedy. The defendant was compelled to honor the lease.

Examples

Example 1 - Unique Art Piece

Scenario:

An art dealer agrees to sell a rare painting to a buyer but then refuses to deliver it. The buyer seeks specific performance to obtain the unique piece, as monetary damages cannot adequately compensate for the loss of a rare work of art.

Example 2 - Real Estate Transaction

Scenario:

A buyer and seller enter into a contract for the sale of a historic property. The seller later tries to back out of the deal. The buyer seeks specific performance to compel the seller to transfer the property, as it is considered unique and irreplaceable.

Conclusion

Specific performance is a powerful remedy in contract law, particularly when the subject matter of the contract is unique or irreplaceable. While not automatically granted, this equitable remedy ensures that the injured party receives the exact performance promised, especially when damages would be inadequate. Courts exercise discretion in awarding specific performance, considering fairness, feasibility, and the clarity of the contract's terms.

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Specification

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