specific performance essay

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Specific Performance

Hanoch Dagan Stewart and Judy Colton Professor of Legal Theory and Innovation & Director, Edmond J Safra Center for Ethics, Tel-Aviv University

Michael Heller Lawrence A Wien Professor of Real Estate Law, Columbia Law School

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When should specific performance be available for breach of contract? Civil law systems make it the primary remedy for breach, while the common law treats it as a humble exception with limited application. The same sharp split exists in legal theory, with philosophers tending to endorse the civil law tradition and economists praising the common law. The net result: the law and theory of specific performance oscillates between incompatible reforms and values.

There is a better approach. Autonomy, rightly understood, makes sense of the current law of specific performance and offers well-grounded reforms that can bring the doctrine closer to its animating principles. By anchoring this contract remedy in a conceptually coherent and normatively attractive framework, our recent  article breaks the decades-long logjam in one of the field’s foundational debates.

Our work here builds on  The Choice Theory of Contracts  and on our responses to the  law-and-economics ,  philosophical , and  contract theory  critiques it attracted (see also our previous OBLB post  engaging with Prof. Oren Bar-Gill’s critique). We showed how contract is an empowering practice that is, and should be, guided by an autonomy-enhancing mission. Contract’s operative doctrines—including the choice of remedy—allow people legitimately to recruit others to their future plans by committing their own future selves in return. This commitment necessarily curtails the self-determination of the promisor’s future self—and it’s the key to understanding specific performance.

• The Compensation Baseline . Contract-keeping is justified because and only to the extent that the claimed dominion of the present self over the future self can itself be justified. This seemingly simple proposition encapsulates both the moral premise of the common law and its challenges. The common law baseline of compensation—and not specific performance—serves as a stronghold for the autonomy of the promisor’s future self. Covering a promisee’s expectation interest is qualitatively less imposing on the future self’s self-determination. Therefore, other things being equal, contract’s autonomy-enhancing mission requires that disappointed promisees should be entitled to damages, rather than specific performance.  The requirement that ‘other things being equal’ must be unpacked. Most contracts can achieve their mission of facilitating promisees’ plans by liquidating breach into money. Where this is true, imposing on the promisor the obligation specifically to perform the promise, rather than to cover its value, cannot be justified by reference to the promisee’s self-determination. This means, at least for liberal contract law, that it cannot be justified, period.  
• Three Challenges . Other things, however, are not always equal. The first challenge therefore is to identify categories of cases in which liquidating the promisor’s performance does significantly frustrate contract’s function as a planning tool. Those categories, at least a priori, do justify specific performance. For the most part, the common law correctly identifies these categories. A second, related challenge is to help parties signal cases in which they consider the contract’s actual performance significant for their own particular plans, even though their contract does not fall within the usual categories. Here, the common law falls substantially short. Parties have a hard time ensuring they will get specific performance when that is what they want from their contracts. The third challenge pushes in the opposite direction. Here, contract law faces categories of cases, notably involving employment, where specific performance is bound to threaten the self-determination of the future self to such a degree that it cannot be justified—even if excluding such a remedy diminishes contract’s empowering potential.  
• Three Doctrinal Takeaways . These challenges in turn yield three practical takeaways. First, the so-called ‘uniqueness’ exception—covering cases in which specific performance is regularly provided—should be refined so it tracks its normative foundation. As a practical matter, this means, distinguishing in real estate transactions between sales of residential and commercial property, and between breaches by sellers and buyers. Second, the common law should not categorically reject parties’ attempts to opt into specific performance (and to penalty clauses) to remedy breach. In particular, specific performance should be more readily available when an employer breaches a promise to continue to employ an employee. Finally, the doctrine should be even more skeptical in enforcing non-compete agreements that overly facilitate the current self’s pursuit of its welfarist interests at the expense of the future self’s autonomy.  
• Our Bottom Line . Let us state our bottom line plainly. From the standpoint of autonomy, (1) specific performance must not be the default remedy. (2) Specific performance should nonetheless be available where monetary recovery cannot substantially avoid the disruption breach causes to a promisee’s plan. (3) Translating (2) into a workable rule implies that specific performance should be the default if the promisee is a buyer of a unique good for personal use, paradigmatically, a personal residence. (4) Because (3) is only a proxy for (2), parties should be able to opt into specific performance, so long as they do not violate (5). (5) Specific performance should not be awarded against providers of personal services.  
• Autonomy Versus Law and Economics . The dominant economic analysis of specific performance also arrives at these five principles, raising the question whether our account is just economic analysis in disguise. It is not. Our five principles derive from contract’s autonomy-based telos and lead to a distinct reform agenda. In our account, (2) and (3) are normative defaults. Contra the economists, they do not arise from or depend upon the current majoritarian preferences of contracting parties. On (4), relational justice constrains party opt-in, an autonomy-regarding floor missing from the economic account. Finally, (5) yields a mandatory rule. Contra the economists, it is not contingent on people’s imperfect foresight, which technology may ameliorate.

In sum, we offer an understanding of specific performance firmly grounded in the most fundamental normative commitments of contract law in a liberal polity. The common law baseline deserves moral praise—contra the economists’ pragmatic apology and the philosophers’ moral condemnation.

Hanoch Dagan  is Stewart and Judy Colton Professor of Legal Theory and Innovation & Director of the Edmond J Safra Center for Ethics, Tel-Aviv University. 

Michael Heller  is Lawrence A Wien Professor of Real Estate Law, Columbia Law School.

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Specific Performance

Definition of specific performance, what is specific performance.

For example, specific performance is usually ordered in cases wherein an award of damages would not be enough to remedy the situation, such as cases involving the sale of real property. A specific performance remedy is up to the discretion of the court. Therefore, its availability relies heavily upon whether its award is appropriate when considering the facts of the case.

History of Specific Performance

Circumstances in which specific performance might be ordered.

There are certain circumstances in which specific performance might be ordered. For example, specific performance will be enforced only in cases where the underlying contract was both fair and equitable . Examples of specific goods that have been at the center of cases wherein the courts have ordered specific performance include works of art, and products that were custom-made specific to the buyer’s request.

Exceptional Circumstances Barring Specific Performance

If the court finds any of these exceptional circumstances barring specific performance to be true, then specific performance will not be ordered.

Buyer’s Right to Specific Performance or Replevin

Jill bought a used car just over a year ago. She financed the car through the car lot, and only made payments for the first eight months. Jill has been hiding the car, expecting the creditor to repossess it, and her brothers have threatened violence when a tow truck showed up at her apartment to take it. In this case, the creditor is unable to repossess the car without breaching the peace, or without risking injury.

Specific Performance Example Involving an Oral Contract

Weldon finally found a contractor, Paul Hammer, who drilled the well and obtained an assignment of the lease from Joachim. On the same day that Joachim assigned the lease to Hammer and his partner, Weldon demanded that Joachim assign him the interest he had been promised. Joachim, however, ultimately refused to uphold his end of the bargain. Joachim testified that he never had any conversation with Weldon insofar as drilling the well, nor did he have an oral or written contract with Weldon.

As such, the findings of the trial court were affirmed, in that the Supreme Court of Oklahoma held that Weldon did perform on the oral contract as agreed and further, that the trial court did not err in its decision to enforce specific performance.

Related Legal Terms and Issues

IPSA LOQUITUR

Contract: Specific Performance

Specific performance, what is specific performance.

Specific performance is a court order which obliges the defendant to perform their outstanding obligations under the law. For example, any contractual duties the defendant has yet to perform or an equitable duty which has arisen. 

When Will Specific Performance Be Granted?

Specific performance will only be granted if damages are an inadequate method of compensating the claimant:  Cohen v Roche  [1927] 1 KB 169. Damages are only considered inadequate in this context if one of two conditions is met:

1. The goods are unique, meaning that there is no market for them in which the claimant could acquire substitute performance:  Co-op insurance v Argyll Stores  [1997] 2 WLR 898.

For example, pieces of art or land are unique:  Falcke v Gray  (1859) 62 Eng Rep 250. There is a market if the goods are available elsewhere, even if on worse terms or at a higher price.

2. The harm to the claimant is intrinsically impossible to calculate in economic terms or their interest in performance is incapable of economic valuation:  Beswick v Beswick  [1968] AC 58.

Damages are not considered inadequate merely because they are difficult (but not impossible) to calculate or because the seller does not have the funds to pay them:  Societe des Industries Metallurgiques SA v The Bronx Engineering Co Ltd  [1975] 1 Lloyd’s Rep 465.

When Will Specific Performance be Refused?

As an equitable remedy, specific performance is discretionary: the court can refuse to grant it even if damages are inadequate. The following are common circumstances in which specific performance will not be granted: 

Personal Labour

Specific performance cannot be ordered where this would involve ordering personal labour on the part of the defendant (this being akin to slavery):  Cohen v Roche  [1927] 1 KB 169.

Undue Hardship

Specific performance may not be granted if the order would cause substantial and undue hardship to the defendant:  Denne v Light (1857) 8 DM & G 774. That hardship does not need to be the fault of the claimant:  Patel v Ali  [1984] 1 All ER 978.

Long-Term Supervision

The courts will generally not grant specific performance if enforcing the performance is impossible or would need ongoing or long-term supervision by the court:  Co-op insurance v Argyll Stores  [1997] 2 WLR 898.

Unjustified Delay

The courts may refuse specific performance where they consider that there has been unjustified delay in bringing the claim:  Milward v Earl Thanet   (1801) 5 Ves 720. 

Inequitable Conduct

Since specific performance is an equitable remedy, the usual equitable bars apply. The courts may refuse the remedy if the claimant acts inequitably or does not intend to perform their end of the bargain:  Chappell v Times Newspapers [1975] 1 WLR 482.

Specific performance will not be granted if the obligation it would enforce is conditional on the claimant performing some obligation which is not itself specifically enforceable and which the claimant has yet to perform:  Price v Strange  [1977] 3 All ER 371.

Contract Remedies Quiz

Test yourself on the principles which determine when contract remedies are available.

Pierre agrees to buy a priceless painting from Sophie to display in his house, for several million pounds. He does not intend to pay. Sophie is now saying that she will refuse to hand over the painting. Can Pierre obtain an order for specific performance?

Incorrect . Since specific performance is an equitable remedy, the usual equitable bars apply. The courts may refuse the remedy if the claimant acts inequitably or does not intend to perform their end of the bargain:  Chappell v Times Newspapers.

When is specific performance available as a remedy to a breach of contract?

Incorrect . See Cohen v Roche.

In what two scenarios is a loss sufficiently non-remote to be recovered in an action for breach of contract?

A claimant suing for breach of contract can claim both the market difference measure and the reliance loss measure at the same time. True or false?

Incorrect . These two measures are alternatives to each other.

Alice contracts Bill to install new fans in her restaurant. Bill completes the work late, causing Alice considerable stress. Can Alice recover damages for her stress?

Incorrect . Emotional loss is not normally recoverable: Addis v Gramophone.

Emmy purchases a new fish tank filter from Lee. The filter is defective, and it shuts down. Emmy's incredibly rare and expensive fish die as a result. Lee argues that he should not be liable as it was unforeseeable that the breach would cause such a high degree of loss. Is he correct?

Incorrect . There is no need for the degree of the loss to be foreseeable, only its broad type:  Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd.  In this case the death of fish was foreseeable, so Lee is liable.

Arthur contracts for a private car from Celestine, stressing that he needs to arrive before three o'clock. He does not explain the reason why, which is that if he is late he will miss a meeting with an important client and lose a valuable deal. Celestine drives painfully slowly and does not get Arthur to his destination on time. Arthur loses the deal. Can Arthur recover damages for the lost contract?

Incorrect . Unusual losses are normally considered too remote unless the other party is specifically made aware of them at the time of contracting: Victoria Laundry (Windsor) Ltd v Newman Industries Ltd.

What is the purpose of general contract damages?

Incorrect . The purpose of damages as a contractual remedy is to put the claimant in the position they would be in had the contract been properly performed: Robinson v Harman (1848) 1 Ex 850. If the claimant has not suffered any loss, they are only entitled to nominal damages.

Laura contracts Stephen to arrange for someone to ghost-write her memoirs. For various reasons, it is not possible for Laura to obtain another person to do this. The relationship falls apart and Stephen refuses to perform. Writing the book in accordance with the contract would take time and require supervision. Can Laura obtain an order for specific performance?

Incorrect . Specific performance is not available where it would require long-term supervision by the court: Co-op insurance v Argyll Stores .

When can a claimant obtain a consumer surplus award of damages?

Incorrect . See Ruxley Electronics and Construction Ltd v Forsyth.

Alice contracts Bill to install new fans in her restaurant. Bill completes the work defectively, causing a fan to fall on Alice's head. She suffers a brain injury and develops depression as a result. Can Alice recover damages for her mental illness and emotional distress?

Incorrect . Emotional loss is not normally recoverable, but there is an exception where it is consequent on physical injury or inconvenience: Perry v Sidney Phillips.

When are damages considered inadequate for the purposes of obtaining specific performance as a remedy? (Two answers)

Laura contracts Stephen to personally ghost-write her memoirs. Since Stephen knows her best, it is not possible for Laura to obtain another person to write the book. The relationship falls apart and Stephen refuses to write the book. Can Laura obtain an order for specific performance?

Incorrect . Specific performance is not available where it would require personal labour by the defendant: Cohen v Roche.

Darrel makes a contract with Pierre, agreeing that he will tend to Pierre's garden while Pierre is away. Instead of performing, Darrel goes on holiday. During this time, there is a freak storm which floods Pierre's garden and causes a lot of damage. Can Pierre obtain damages from Darrel for the damage to his garden?

Incorrect . The claimant can only recover damages which were caused by the breach. But for Darrel going on holiday, the garden would still have been damaged. In addition, even if 'but for' causation is established, the defendant is normally not liable for unforeseeable acts of nature such as a freak storm: The Monarch Steamship.

What is the default measure of damages in contract?

Incorrect .

When is the hypothetical fee measure of damages available in contract?

Incorrect . See Morris-Garner v One Step (Support) Ltd.

What two elements must the claimant show to obtain the cost of cure measure of damages?

What are the elements for determining whether a prohibitory injunction should be granted? (Three answers)

Incorrect . See American Cyanamid Co v Ethicon Ltd.

When will an injunction be refused despite the relevant test being met? (Three answers)

Pierre agrees to rent a priceless painting from Sophie to display in his house, on condition that he first pay a deposit of several million. He has yet to pay the deposit. Sophie is now saying that she will refuse to hand over the painting. Can Pierre obtain an order for specific performance?

Incorrect . Specific performance will not be granted if the obligation it would enforce is conditional on the claimant performing some obligation which is not itself specifically enforceable and which the claimant has yet to perform:  Price v Strange.

Is it a failure to mitigate to refuse to terminate a contract in response to a repudiatory breach, where this refusal leads to further loss?

Incorrect . An unreasonable refusal to terminate the contract in response to a repudiatory breach is not considered a failure to mitigate unless the claimant has no legitimate interest in continuing the contract:  White & Carter v McGregor.

When is a liquidated damages clause void under the penalty clause rule?

Incorrect . A penalty clause is one which imposes a penalty on the other party which is 'out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation':  Cavendish Square Holding BV v Makdessi.

Sophie hires Anne to install a storm drainage system in her garden. Anne's work is defective, meaning that it does not drain water properly. That summer, an unexpected storm hits and causes considerable water damage to Sophie's garden. The storm was not forecast, and is described in the media as a 'freak' occurrence. Anne argues that the storm was an unforeseeable act of nature, meaning that her breach did not cause Sophie's loss. Is Anne correct?

Incorrect . While unforeseeable natural events or third-party acts can break the chain of causation, this will not be the case if the nature of the defendant's contractual duty was to guard against that kind of natural event or act: London Joint Stock Bank Ltd v Macmillan.

What are the elements for determining whether a mandatory injunction should be granted? (Four answers)

Incorrect . See Nottingham Building Society v Eurodynamics Systems .

Complete this sentence: Damages are assessed according to the circumstances existing...

Incorrect . See Suleman v Shahsavari.

Micah contracts with John for a package holiday. In breach of contract, John fails to make the appropriate reservations, leaving Micah stranded abroad without a hotel for several days. Micah suffers a severe stress reaction as a result. Can Micah recover damages for her emotional distress?

Incorrect . While emotional damages are not normally recoverable in contract, there is an exception where the purpose of the term breached was to provide enjoyment, amenity or peace of mind:  Jarvis v Swan Tours. 

A claimant suing for breach of contract can claim both the market difference measure and the cost of cure measure at the same time. True or false?

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Performance, Punishment, and the Nature of Contractual Obligation

(1997) 60 Modern Law Review 360-377

28 Pages Posted: 27 Nov 2015

Stephen Smith

Mcgill university - faculty of law (deceased).

Date Written: November 25, 1996

This essay explains why, contrary to many writers’ views, the common law’s refusal to award specific performance routinely and its refusal to punish deliberate breach of contract are consistent with the idea that contractual obligations are based on the moral duty to keep your word.

Keywords: contract law, remedies, damages, specific performance, contract theory

JEL Classification: K10, K12, K40

Suggested Citation: Suggested Citation

Stephen Smith (Contact Author)

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New Private Law Blog

Specific Performance in Action – Yonathan Arbel

Post by Yonathan Arbel

Greg Klass’ recent post (as well as recent essay ) raised the issue of efficient breach. Deeply embedded in the debate on efficient breach is the choice of remedies between specific performance and expectation damages. If courts award money damages, then this—in the view of opponents of the efficient breach theory—enables promisors to “buy” their way out of promises. Instead, the argument goes, awarding specific performance would give promisees “what they were promised”.  Contrary to their approach, specific performance is reserved under U.S. law only to ( arguably ) exceptional circumstances involving unique goods and land.

In my work, I try to show that enforcement matters. Parties do not negotiate or behave in the shadow of the law, I argue, but in the shadow of the sheriff. And conventional theory has tended to downplay and sometimes completely overlook the role of enforcement. Thinking through the lens of enforcement on private law provides new insight on old questions and the question of choice of remedies is no exception.

Looking from this perspective, I conducted a qualitative empirical analysis looking into the motivations of people suing for specific performance and the real-life outcomes of these lawsuits: are judgments implemented? Do people negotiate around them ? To what extent do the motivations of litigants differ from their lawyers ?

The recently published results of this investigation highlight the difference between doctrine and practice. The study reaches two complementary conclusions. On the one hand, specific performance is definitely not equivalent to giving the promisee what was promised, but in practice, it may be akin to giving the promisee less than she would get under expectation damages. The reason is comparative enforceability. For reason of institutional competence, specific performance is less enforceable than money damages. As I explain in the paper, our enforcement institutions specialize in the enforcement of money damages, but lack the resources, powers, and experience to effectively enforce judgments for specific relief. For theorists who care about corrective justice and the morality of promises, this conclusion that specific performance is inferior to money damages from the promisee’s perspective should give pause.

But the complement of this conclusion is that the reason specific performance is difficult to enforce is, to a large extent, a result of the insensitivity of our doctrine and law to the question of enforceability. Rethinking doctrine through the prism of enforceability could make specific performance more enforceable, thus narrowing the gap between that that was promised and that that is granted.

Consider the method of enforcement. When scholarly attention was devoted to this aspect of the problem, which is rather atypical, the assumption was that enforcement should be done through monitoring ; e.g., sending a special master to the construction site to oversee the construction of a new building. Monitoring is very costly and it is especially unappealing to fund monitoring out of the public fisc, thus making many cautious about granting specific performance and justifying the exceptional nature of enforcing specific performance.

But the emphasis on enforcement by monitoring is misguided, as the most common and cost-effective mode of enforcement is by what I call ‘validation’. When two parties enter into a sale contract, a breach is most easily detected by validating whether the received good conforms to the standard of quality promised. The party receiving the good, or the judge, will ask: does the table have four legs? Is the finishing proper? Does it support sufficient weight? These questions assume a benchmark, a common standard, and compare the product to that benchmark. The enforcement-by-validation is the enforcement method most commonly chosen by private parties in their contracts (often implicitly) and it is by no means obvious that the court should assume a different method just because the contract was breached.

In one of the cases I examined, a woman ordered a custom-made door to her new home from a company specializing in construction and design of such doors. Unfortunately, the door that was delivered opened in the wrong direction and was unusable. The woman sued and won a specific performance judgment. Consistent with the study design, I met her a few years after the fact to see whether the judgment was implemented. But I did not have to ask: when I came to her home, I saw the beautiful wooden door opening in the right direction. When I asked her about the process, she told me that no special master was appointed and that enforcement was quick and efficient. She was not worried at all that that the company would deliver sub-par door. The judge, already on her side, would be able to spot deviations immediately and sanction the company accordingly. In this case, enforcement by validation functioned smoothly.

And here is where doctrine manifests insensitivity to enforcement. According to the unique goods requirement, specific performance will only be awarded if the item in question is unique. But if it is unique, how can the judge adequately validate the quality of the product? When assessing the quality of the table, the judge can consult industry standards and Ikea catalogs; when assessing the quality of a painting— what can inform the judge ?

Denying wider grant of specific performance judgments because they are difficult to enforce is therefore a problematic conclusion. To a degree, these judgments are difficult to enforce because they are given in the wrong context. Greater sensitivity to enforcement would greatly enrich our understanding of remedies and could narrow the gap between the content of promises and the content of remedies, which should be of interest not only to moralists but also to economists.

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Scali Rasmussen

Specific performance.

Enforcement of real property purchase agreements

Contributors

Jeffrey W. Erdman

Julie S. Pearson

“Specific Performance” is a powerful legal remedy afforded to parties to certain contracts where there has been a failure of performance on one side. In California, the remedy is established by statute in the California Civil Code at Sections 3384 to 3395. Most commonly, a court action for specific performance is used to compel performance of either the buyer or the seller of real property, enforcing the specific terms of the real estate purchase agreement. This remedy is often pursued regardless of whether other monetary remedies may be available to the party not in breach.

The scenarios in which an action for specific performance can be employed are numerous. Imagine a situation where auto dealer holds the assets of an auto dealership in one corporation but holds the real property where the dealership operates in another corporation, also controlled by the same dealer, subject to a lease to the dealership. The dealer decides to sell the dealership to a buyer, who is granted a long-term lease on the dealership property and who is also granted an option to purchase the real property at a future date. A few years later, the buyer decides to timely exercise the option to purchase the real property at the option price but the seller now believes that the option price is too low and does not want to sell. As long as the buyer can show that the option contract is not so ambiguous as to be unenforceable and that the buyer is able to perform and pay the full option price, the buyer can obtain a court judgment against the seller forcing the sale to the buyer -- regardless of whether the option price is now considered to be below the value of the property.

This is primarily because the law has long recognized real property as unique in such a way that monetary recovery would not fully compensate a buyer for being unable to purchase the property. In fact, California law – like many other states – provides for a legal presumption that monetary recovery would be inadequate to compensate for a breach of a real property purchase agreement. The law imposes a conclusive presumption with regard to residential property when the buyer intends to occupy the property and, in all other instances, a presumption shifting the burden of proof as to the adequacy of monetary remedies. (Cal. Civ. Code § 3387.)

Is the right to specific performance limited to buyers?

No. Although it is unusual, a seller also has a legal right to bring an action for specific performance against a defaulting buyer under California law. Many real property purchase agreements provide for “exclusive” remedies to sellers. Commonly, such a remedy provides exclusively for the payment of liquidated damages resulting from a buyer’s breach (i.e. a specific sum or method of calculation for money that is payable by the buyer of the buyer breaches), in which instance the purchase agreement itself may prohibit an action for specific performance. However, in cases where the seller’s specified remedy is not exclusive, the remedy of specific performance is considered to be held mutually by the buyer and seller. This means that the seller can typically elect whether to pursue monetary remedies or the remedy of specific performance. (Cal. Civ. Code § 3389 and § 1680.) Nevertheless, in the alternative to an action for specific performance, a seller may prefer to pursue a sale to a different buyer and merely seek monetary damages against the breaching buyer. For example, a seller may seek damages such as the difference between a lower price paid by a second buyer as versus what the first buyer agreed to pay in a downward market and/or the interest on the unpaid purchase price between the date of performance and the date of judgment.

Can a buyer who succeeds at compelling specific performance also obtain damages?

Yes. If the buyer of real property brings an action for specific performance, that buyer may also obtain a damages award for any consequential damages caused by the seller’s refusal to perform. For example, with rental property, the buyer is losing out on rent payments made during the period between the date for closing and the date the buyer is finally able to take ownership. These lost rents are a consequence of the seller’s breach. Similarly, in our scenario above, to the extent the buyer with the option continues to pay rent for the property the buyer optioned to buy, beyond what the buyer would have paid if able to close on the option, the excess rents payments may be a consequential injury to the buyer (subject perhaps to an offset of what the buyer would have paid on any financing). Also, if the cost of the buyer’s financing increased during the period of breach, and the buyer had to pay a higher interest rate for the same loan, that may be considered a consequential injury to the buyer. Of course, interestingly, the breaching seller may seek to offset interest that the seller may have made on the purchase funds had they been paid when intended. In this way, the court effectively conducts an “accounting” between the parties to render each whole in the end.

It is important to note, however, that the attorney’s fees and costs incurred in pursuing or fighting an action for specific performance are not considered a consequential loss associated with the breach. Rather, under California law, only a prevailing party may recovery attorney’s fees and costs if such is provided by the real property purchase agreement executed by the parties. (Cal. Civ. Code § 1717.)

When can specific performance be denied by the court?

First, it should be noted that many types of contracts are not subject to an order for specific performance, including contracts pertaining to personal services and contracts that are not “sufficiently certain to make the precise act which is to be done clearly ascertainable.” (Cal. Civ. Code § 3390.) Second, even in instances in which the type of contract would ordinarily be subject to a remedy of specific performance, the party seeking performance must be able to establish an ability to fully perform both at the time the contract was entered into and at the time any judgment for specific performance is rendered. That is, under California law, specific performance “cannot be enforced in favor of a party who has not [or cannot] fully and fairly performed all of the conditions precedent on his party to the obligation the other party,” unless the failure to perform is only partial and is either “entirely immaterial” or “capable of being fully compensated…” (Cal. Civ. Code § 3392.) For example, if a buyer is unable secure necessary funding, he may be denied specific performance or conversely, if a seller is unable to timely deliver over clean and clear title, the seller may be denied specific performance against a buyer.

Even if a party can meet this legal standard, a court may also deny specific performance against a party where that party can establish it would not be “just and reasonable” (Cal. Civ. Code § 3391(2) – although that does not necessarily merely mean that the deal previously struck was a bad deal for the breaching party. Rather, such a defense would be more likely successful if forcing the transaction would unduly imperil the breaching party and subject them to bankruptcy, receivership or other such detriment. Finally, the breaching party may successfully defend an action for specific performance if that party can establish the underling agreement was the product of fraud or unfair business practices or the result of a “mistake, misapprehension, or surprise” (unless the contract specifically provides for compensation in the event of mistake). (Cal. Civ. Code § 3391(3)-(4).)

How do you prevent the seller from selling the real property before the court decides the case?

As we have explained in an earlier published article , the most significant protection a buyer has to try to ensure that property is not sold to someone else while an action for specific performance is being sought is the power of the lis pendens or Notice of Pendency of Action.

“The significance of a Notice of Pendency of Action is that, by giving notice of a pending legal action involving claims affecting real property identified in the Notice, it protects the interests of the named parties. Once recorded against the property, making the Notice apparent to those who review property title records, the Notice also gives priority to any judgment obtained by the party who recorded the Notice as of the date the Notice is recorded, over subsequent interests obtained which affect the real property. California Civil Procedure Code (CCP) §405.01 et seq. Thus, the Notice can effectively deter subsequent transfer or encumbrance of the identified real property, since it indicates that property ownership rights are in dispute, and the rights of the party who recorded the Notice will have priority, if successful in their claims.”

Final thoughts:

Real estate contracts can be fraught with pitfalls for the unwary. Contract terms and conditions may be included that provide – intentionally or unintentionally – ways to evade performance of a contract in a way that specific performance cannot prevent or remedy. Or, as noted above, the terms may not be sufficiently certain so as to be enforceable by a court. Parties entering into any substantial transaction should seek representation from a qualified professional. At Scali Rasmussen PC, we can provide superior legal counsel at front end (such as the preparation or negotiation of buy-sell agreements) and we can be there if things go wrong during the transaction through our experienced team of litigators. Indeed, in some instances, the best remedy is to pursue the legal right of rescission – essentially the opposite of specific performance in which a transaction is reversed or unwound rather than ordered to be performed. (Watch for an upcoming Ahead of the Curve article on the remedy of rescission.)

Specific Performance Doctrine in Legal Cases Essay

• To find inspiration for your paper and overcome writer’s block
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According Rotteinstein Law Group (RLG) (n.d.), a specific performance is a court order that authorizes a party that breaches a contract to perform certain acts. In addition, a court orders a specific performance when it perceives that damages will inadequately compensate the plaintiff (Kane, n.d.). Just like an injunction, a specific performance is not ordered in every civil law case (RLG, n.d.). This essay not only discuses the elements of Specific Performance but also analyzes whether or not scenarios provided are covered under the doctrine of Specific Performance.

It is worth noting that a court uses its own discretion to award a specific performance (Kane, n.d). Therefore, some cases qualify for specific performance while others do not. Instances where specific performance remedy applies include suits where unique goods, personalities and land are involved (Kane, n.d.). On the other hand, specific performance cannot be granted in cases where it impossible to order it, the plaintiff fails to honor part of the bargain, the contract can be terminated and supervision of the defendant is required (RLG, n.d.).

In the first Scenario, Tarrington enters in to contract with Rainier to sell her house. Afterwards, on finding another suitable buyer, she refuses to sell the house to Rainier. Houses are built on lands, therefore, contracts breaches relating to their sale take the same dimensions as land. While haggling over the price of a house, buyers and sellers generally consider the unique features of a land. This means that contracts breaches relating to the sale of houses can only be settled adequately through specific performance (Kane n.d.).

In the second case, Marita refuses to perform after she contracts, for a month, with Horace’s nightclub. This scenario can also be covered under the doctrine of specific performance because personalities have unique capabilities (Kane, n.d.). People are gifted differently and, therefore, cannot be substituted for others (Kane, n.d.). According to Tufal (n.d.), a court cannot force an actress to act for a plaintiff. However, it can impose an injunction to persuade her to honor a contract by preventing her to perform elsewhere (Tufal, n.d.).

The third Scenario features Juan who enters in to a contract to buy a rare coin from Edmund. This is possible, at that moment, because Edmund decides to do away with his coin collection. However, Edmund chooses to keep his coins. In this case, the court may revert to specific performance and order Edmund to turn over the coin to Juan.This is because the coin is a rare commodity since replacing it with another will not be adequate to compensate Juan.

Lastly, Cary enters in to a contract to sell his 4% share holding in Astro Computer Corp to DeValle. He however, refuses to reassign the shares to him. According to the Blanchard (1997), specific performance is not available unless the damages adequately compensate a plaintiff. However, in this scenario, Devalle can be compensated adequately with money. Therefore, the court cannot order a specific performance by Cary to hand over the shares to him.

In conclusion, specific performance does not apply to all cases involving contracts. Kane (n.d.) reiterates that it is only granted in civil laws suits where damages inadequately compensate the plaintiff. These civil law suits mostly involve rare goods, personalities and land.

Rotteinstein Law Group LLP. (n.d). What is “specific performance”? Web.

Blanchard, J. T. (1997). California remedies: commentary, materials and problems (3rd ed.). Web.

Kane, S. ( n.d). Specific performance . Web.

Tufal, A. (n.d.) . Cases on equitable remedies . Web.

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Beswick v Beswick [1968] AC 58

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Model Answers

• Specific performance may be ordered in lieu of nominal damages to produce a just result for a third party
• P contracted with his nephew (D) to transfer his coal business in consideration of the nephew paying his widow (C) after his passes
• When P died D refused to pay C
• C sued both personally and in her capacity as P’s administratrix for breach of contract

Held (House of Lords)

• C succeeded only in her capacity as administratrix
• Specific performance was ordered for payment to be made
• Legislation is needed to give third parties the right to sue, but if there is further parliamentary procrastination the House of Lords will act on it
• Only nominal damages could be given since the estate did not suffer any loss due to the breach, hence specific performance is required
• In a claim for monetary damages, specific performance has the same effect of letting a party to the contract sue for loss suffered by a third party
• C has administratrix is a party to the contract whereas C in her personal capacity is a third party
• The mere fact that only nominal damages can be obtained does not justify the order of specific performance, there must be something more that makes the award of nominal damages especially unjust, such in the present case where the widow would be left without support

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