specific performance
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Specific performance is an
equitable remedy Equitable remedies are judicial remedies developed by courts of equity from about the time of Henry VIII to provide more flexible responses to changing social conditions than was possible in precedent-based common law. Equitable remedies were gra ...
in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. It is typically available in the sale of land law, but otherwise is not generally available if damages are an appropriate alternative. Specific performance is almost never available for contracts of personal service, although performance may also be ensured through the threat of proceedings for contempt of court. Specific performance is commonly used in the form of injunctive relief concerning confidential information or real property. While specific performance can be in the form of any type of forced action, it is usually to complete a previously established transaction, thus being the most effective remedy in protecting the expectation interest of the innocent party to a contract. It is usually the opposite of a prohibitory injunction, but there are mandatory injunctions that have a similar effect to specific performance. At
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
, a claimant's rights were limited to an award of damages. Later, the court of equity developed the remedy of specific performance instead, should damages prove inadequate. Specific performance is often guaranteed through the remedy of a right of possession, giving the plaintiff the right to take possession of the property in dispute. As with all equitable remedies, orders of specific performance are discretionary, so their availability depends on its appropriateness in the circumstances. Such orders are granted when damages are not an adequate remedy and in some specific cases such as
land Land, also known as dry land, ground, or earth, is the solid terrestrial surface of the planet Earth that is not submerged by the ocean or other bodies of water. It makes up 29% of Earth's surface and includes the continents and various isla ...
(which is regarded as unique).


Exceptional circumstances

An order of specific performance is generally not granted if any of the following is true: * Specific performance would cause severe hardship to the defendant. * The contract was unconscionable. * Common Law damages are readily available or the detriment suffered by the claimant is easy to substitute, then damages are adequate.. . * The claimant has misbehaved ( unclean hands). * Specific performance is impossible. * Performance consists of a personal service . * The contract is too vague to be enforced. * The contract was terminable at will (meaning either party can renege without notice). ** Note that
consumer protection law Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...
s may disallow terms that allow a company to terminate a consumer contract at will (e.g.
Unfair Terms in Consumer Contracts Regulations 1999 The Unfair Terms in Consumer Contracts Regulations 1999SI 1999/2083 is an old UK statutory instrument, which had implemented the EU (then EEC) Unfair Consumer Contract Terms Directivebr>93/13/EECinto domestic law.Implemented under the European C ...
) * The contract required constant supervision.. * Mutuality was lacking in the initial agreement of the contract. * The contract was made for no consideration. * Specific performance will not be granted for contracts which are void or unenforceable. The exception to this (in equity) is in relation estoppel or part performance.. * Where an injunction to restrain an employee from working for a rival employer will be granted even though specific performance cannot be obtained. The leading case is '' Lumley v Wagner'', which is an English decision. Additionally, in
England and Wales England and Wales () is one of the three legal jurisdictions of the United Kingdom. It covers the constituent countries England and Wales and was formed by the Laws in Wales Acts 1535 and 1542. The substantive law of the jurisdiction is Eng ...
, under s. 50 of the
Senior Courts Act 1981 The Senior Courts Act 1981 (c.54), originally named the Supreme Court Act 1981, is an Act of the Parliament of the United Kingdom. The Act prescribes the structure and jurisdictions of the Senior Courts of England and Wales (previously known as ...
, the High Court has a discretion to award a claimant damages ''in lieu'' of specific performance (or an injunction). Such damages will normally be assessed on the same basis as damages for breach of contract, namely to place the claimant in the position he would have been had the contract been carried out.


Examples

In practice, ''specific performance'' is most often used as a remedy in transactions regarding land, such as in the sale of land where the vendor refuses to convey title. The reason being that land is unique and that there is not another legal remedy available to put the non-breaching party in the same position had the contract been performed. However, the limits of ''specific performance'' in other contexts are narrow. Moreover, performance based on the personal judgment or abilities of the party on which the demand is made is rarely ordered by the court. The reason behind it is that the forced party will often perform below the party's regular standard, when it is in the party's ability to do so. Monetary damages are usually given instead. Traditionally, equity would only grant specific performance with respect to contracts involving chattels where the goods were unique in character, such as art, heirlooms, and the like. The rationale behind this was that with goods being
fungible In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, and each of whose parts is indistinguishable from any other part. Fungible tokens can be exchanged or replaced; for exam ...
, the aggrieved party had an adequate remedy in damages for the other party's non-performance. In the United States, Article 2 of the
Uniform Commercial Code The Uniform Commercial Code (UCC), first published in 1952, is one of a number of Uniform Acts that have been established as law with the goal of harmonizing the laws of sales and other commercial transactions across the United States through U ...
displaces the traditional rule in an attempt to adjust the law of sales of goods to the realities of the modern commercial marketplace. If the goods are identified to the contract for sale and in the possession of the seller, a court may order that the goods be delivered over to the buyer upon payment of the price. This is termed '' replevin''. In addition, the Code allows a court to order specific performance where "the goods are unique or in other proper circumstances", leaving the question of what circumstances are proper to be developed by case law. The relief of Specific Performance is an equitable relief which is usually remedial or protective in nature. In the civil law (the law of continental Europe and much of the non English speaking world) specific performance is considered to be the basic right. Money damages are a kind of "substitute specific performance." Indeed, it has been proposed that substitute specific performance better explains the common law rules of contract as well, see (Steven Smith, ''Contract Law'', Clarenden Law ). In English law, in principle reparation must be done ''in
specie Specie may refer to: * Coins or other metal money in mass circulation * Bullion coins * Hard money (policy) * Commodity money Commodity money is money whose value comes from a commodity of which it is made. Commodity money consists of objects ...
'' unless another remedy is ‘more appropriate’.


Legal debate

There is an ongoing debate in the legal literature regarding the desirability of specific performance. Economists, generally, take the view that specific performance should be reserved to exceptional settings, because it is costly to administer and may deter promisors from engaging in
efficient breach In legal theory, particularly in law and economics, efficient breach is a voluntary breach of contract and payment of damages by a party who concludes that they would incur greater economic loss by performing under the contract. Development of th ...
. Professor Steven Shavell, for example, famously argued that specific performance should only be reserved to contracts to convey property and that in all other cases, money damages would be superior. In contrast, many lawyers from other philosophical traditions take the view that specific performance should be preferred as it is closest to what was promised in the contract. There is also uncertainty arising from empirical research whether specific performance provides greater value to promisees than money damages, given the difficulties of enforcement.


Law and economics

In contract theory, economists have compared specific performance to at-will contracts. Suppose that a seller and a buyer have agreed to trade a good in the future. In the case of specific performance, delivery of the good can be mandated by the court, while in the case of at-will contracting, the seller always has the right to walk away from the contract.
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and Moore (1988) have shown that if only at-will contracts are enforceable, then the parties have insufficient incentives to make relationship-specific investments. Subsequently, several authors such as Aghion et al. (1994) have shown that the underinvestment problem (sometimes called the hold-up problem) can be solved if specific performance contracts are feasible. However, these conclusions rely on the assumption that there are no information asymmetries. Schmitz (2022) has pointed out that if the seller may gain an informational advantage over the buyer after the contract has been signed, then at-will contracts may sometimes be preferable from an economic efficiency point-of-view.


See also

*
Damages At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at ...
*
Equitable remedy Equitable remedies are judicial remedies developed by courts of equity from about the time of Henry VIII to provide more flexible responses to changing social conditions than was possible in precedent-based common law. Equitable remedies were gra ...
*
Tort A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
*
Clyatt v. United States
', 197 U.S. 207 (1905) no specific performance on employment contracts *'' Beswick v Beswick'' *'' Tamplin v James''


References

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Sources

*A Kronman, ‘Specific Performance’ (1978) 45 University of Chicago LR 351 *S Schwartz, ‘The Case for Specific Performance’ (1979) 89 Yale Law Journal 271 *I Macneil, ‘Efficient Breach of Contract: Circles in the Sky’ (1982) 68 Virginia LR 947


External links


Guide to specific performance in property contracts
Contract law Equity (law) Judicial remedies