Effects of Contracts - Specific Performance

Question 1

When the court SHALL grant specific performance

Answer 1

When the Court Shall Grant Specific Performance—For some obligations the court is required to grant specific performance unless it is impracticable.

			i. When Mandatory—La. Civ. Code art. 1986 para. 1 provides: “Upon an obligor’s failure to perform an obligation to deliver a thing, or not to do an act, or to execute an instrument, the court shall grant specific performance plus damages for delay if the obligee so demands.  If specific performance is impracticable, the court may allow damages to the obligee.”
				(a) Obligation to Deliver a Thing—This is a type of obligation to do a thing.  When the obligor fails to deliver a thing, specific performance s preferred. For example, if A agrees to sell his car to B, but fails to deliver the car in a timely fashion, the court should order specific performance.  Why is specific performance a preferred remedy for breach of this type of obligation?
					(i) Giralt v. Feucht—Feucht promised to sell a house to Girault, but later reused to go forward with the act of sale.  The court awarded specific performance.  Note that the court calls this an obligation “to deliver.”  Based on the facts, it may be more accurate to characterize this as an obligation to execute an instrument (as discussed below).  Do you see why?
				(b) Obligation Not to Do—This type of obligation is an obligation to refrain from committing some kind of act.  Noncompete agreements contain obligations of this type.  There are many other examples in the Civil Code.  See, e.g., La. Civ. Code arts. 2690 & 2693.  Why is specific performance a preferred remedy for breach of this type of obligation?
					(i) Cellular One, Inc. v. Boyd—Boyd and Hamilton signed noncompete agreements with their company. Then they left and started competing.  Their former employer sued them for injunctive relief.  The court awarded specific performance.  However, you should note that noncompete agreements are governed by special legislation designed to prevent oppression of employees.  See La. R.S. 23:921.

(c) Obligation to Execute an Instrument—This type of obligation is generally related to an obligation to give. The obligation to give is that connected with the sale or other transfer of a thing. In those transfers, however, the transfer occurs contemporaneously with the execution of the instrument. Or, the obligation to execute an instrument might involve executing a compromise agreement after reciting a compromise in open court. Why is specific performance a preferred remedy for this type of obligation?
(i) Tolbert v. Hyatt Management—Tolbert filed a personal injury action against Hyatt. The parties settled in open court. Plaintiff later refused to sign a release. The defendant sued for specific performance, which the court granted.
(ii) Bonneau v. Blalock—The Blalocks leased property to American Oil Company, who assigned its rights to Bonneau. The lease contained an option to purchase. Bonneau properly notified the Blalocks of his intention to exercise the option. The Blalocks refused to comply. The court awarded specific performance.
ii. Exception: Mandatory but Impracticable—The Civil Code recognizes that damages may be more appropriate, even when specific performance is otherwise required, when an award of specific performance is “impracticable.” This is elaborated upon in Article 1986, comment (b). Also, the Louisiana Supreme Court has elaborated on this notion very famous case. You need to know it by name.
(a) J. Weingarten, Inc. v. Northgate Mall, Inc. (La. 1981)—Weingarten leased some space in Northgate Mall to run a grocery store. Northgate decided to expand the mall so it could compete with some other malls in the area. Weingarten complains that the expansion infringes on Weingarten’s rights under the lease. Weingarten threatens to file suit, but Northgate doesn’t stop. Weingarten files suit and the trial court issued a TRO. But, at the later hearing, the court refused a preliminary injunction. The court of appeal reversed. Northgate appealed.
- Whats happening here is that the defendants are trying to apply common law rules to the doctrine of specific performance. The defendants are relying on procedural law, but the substantive law of specific performance trumps the procedural law of specific performance.
- “Impracticable”
◊ Impossible
◊ Greatly disproportionate
◊ No longer in creditor’s interest
◊ Negative impact on third parties
◊ Economic waste/social cost
- Is it actually impossible to tear down the mall? No, but it very well may be impracticable.
- The tearing down of the mall is not in Weingarten’s interest at all, and is disproportionate to any actual damage that has been sustained by the plaintiff.

Question 2

When specific performance is at the court’s discretion

Answer 2

“Upon a failure to perform an obligation that has another object, such as an obligation to do, the granting of specific performance is at the discretion of the court.”

i. Obligation to Do—This type of obligation involves conduct such as making something, rendering a service, or doing some other affirmative act.

Question 3

Enforcement

Answer 3

SP is enforced by injunction, duh.

				a. Performance by Obligor—Obviously, the court may order that the obligor perform the obligation.  This is accomplished by an injunction.
				b. Performance by Third Party at Obligor’s Expense—The court could also order that the obligation will be performed by a third person at the obligor’s expense.  This occurs less frequently and is similar to an award of damages.
				c. Restraint of Obligor—La. Civ. Code art. 1987 provides: “The obligor may be restrained from doing anything in violation of an obligation not to do.”