Specific Performance and Injunctions Flashcards
What is a specific performance?
An equitable remedy ordering the defaulting party to perform its obligations under the contract
In what case will it be granted and by who?
It is granted in cases where damages are not adequate and this is done by the courts only when it is fair and reasonable in all circumstances
What is contempt of court?
Contempt of court is when the court makes a decree of specific performance and the party in breach refuses to carry out the contract
Give a case law example of when damages are adequate
Johnson v Agnew (1979)
* * Plaintiff (vendors), being in arrears with mortgage repayments, entered into a contract for sale of their properties
* Defendant (Purchasers) failed to complete the contract for sale * Vendors obtained an order for specific performance * Purchasers failed to comply with the order and mortgagees duly enforced their securities by selling the properties * Proceeds of the sale were insufficient to discharge the mortgage in full * Vendors sought an order that purchasers should pay balance of purchase price to vendors Held: * Where specific performance is ordered but not complied with and plaintiff’s loss was not adequately covered, damages are still available as an alternative remedy * Damages will be assessed as at the date when remedy of specific performance was aborted
What are the four reasons an order for specific performance might be restricted?
- Severe Hardship
- “He who comes to equity must come with clean hands”
- Certain kinds of contracts (personal services)
- Constant supervision of the court will be required
What is a case law example of ‘Severe Hardship’?
Patel v Ali [1984] Ch 283 (Severe Hardship)
* Vendor (Patel) entered into contract for sale of house to Purchaser (Ali) * Vendor was diagnosed with bone cancer and had to have a leg amputated * Her husband had been sent to prison and she had two children * Purchaser sought order for specific performance requiring vendor honour the sale of her house * Forcing vendor to sell, would have caused significant hardship particularly since she relied on the help off her neighbours Held: * Courts will refuse an order for specific performance if to do so would cause significant hardship, even though hardship was not caused by plaintiff * In this case, in view of the hardship to defendant, it would be just and equitable for plaintiff to seek remedy in damages
Order for specific performance was discharged
Give a case law example of specific performance being granted in **extreme circumtances **
Sky Petroleum Ltd. v V.I.P. Petroleum [1974] 1 All E.R. 954
- Plaintiffs entered into contract with defendants to purchase their entire requirements of
motor gasoline and diesel fuel for filling stations - Fixed price contract and minimum annual quantity of supply was stipulated
- At time of the dispute there was an oil crisis and supply of petroleum was scarce
- Defendants purported to terminate contract
Held:
* Specific performance granted BUT…the order was granted in extreme circumstances
- Market was volatile - Court could not sensibly assess what losses the plaintiff would suffer as a result of not being supplied with petroleum and it was unlikely plaintiffs could source the petroleum from elsewhere, given the oil crisis
- Subsequent courts have been reluctant to grant specific performance to enforce contracts for sale of goods
Give a case law example of ‘He who comes to equity must come with clean hands’
Shell UK ltd v Lostock Garages Ltd [1976]
- Lostock and Shell entered into a contract in which Shell would supply petrol and oil to Lostock, in return for Lostock buying its goods from Shell exclusively
- But Shell then reduced its petrol prices for some nearby petrol stations and Lostock’s customers went there instead
- The whole situation also raised competition law and restraint of trade issues
- Lostock had no choice but to trade at a loss and sought another supplier
- Shell sued Lostock for breach of contract and sought an order for specific performance of the original contract
Held: Specific performance will not be ordered if a party has acted badly
What did Ormon LJ say in this case?
“[the] funadmental principle of equity that relief by way of …. specific performance … will only be granted when ‘it is just and equitable so to do…”
Give a case law example of ‘Certain types of contracts’
De Francesco v Barnum (1890) 44 ChD 430
- Contracts for personal services are not, generally speaking, specifically
enforceable
→ Some exceptions, such as potentially granting specific performance against employer companies - Courts should not make any orders to force a person to work, where that would be tantamount to slavery
→This situation is now prohibited by statute in contracts of employment
Give a case law example of ‘constant supervision of the court’
- Constant supervision of the court:
Cooperative Insurance Society Ltd v Argyll Stores Ltd [1998] AC 1 (House of Lords)
- Claimants granted the defendants a lease of one of the units in a shopping centre to operate a supermarket
- Term of lease was 35 years, from August 1979
- The supermarket was the largest shop in the shopping centre and the greatest
attraction - In 1994, the defendants undertook a major review of their business and decided to close 27 loss-making or less profitable supermarkets and in April 1995 they announced that this supermarket would close in May 1995
- Claimants invited the defendants to continue trading until a suitable assignee could be found and offered to negotiate a temporary rent concession, but without replying, the defendants closed the supermarket and stripped out the fixtures and fittings
- Claimants brought an action seeking specific performance and/or damages
Held:
* Order for specific performance was refused
Constant supervision of the implementation of the order would be required by the court and this would be impractical
What did Lord Hoffman say in this case?
‘But the purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance. A remedy which enables him to secure, in money terms, more than the performance due to him is unjust’.
It is not in public interest for the court to “require someone to carry on business at a loss if there is any plausible alternative [way of] compensation”
“…damages… brings the litigation to an end”
What are injunctions?
An equitable remedy in which a court orders a party to refrain from performing, or to perform a particular act
What two types can injuctions come in?
- Prohibitory Injuction - prohibits or prevents someone from doing something where there is a negative stipulation in a contract
- **Mandatory Injunction **- requires or obliges someone to do something pursuant to a contract
Give a case law example of a Prohibitory Injuction
**Warner Bros v Nelson (1937) **
- The actress Bette Davis entered into a contract with Warner Bros, for 52 weeks, renewable for further periods of 52 weeks, whereby she agreed to render her exclusive services to Warner Bros, and not to work for any other film studio during her contract
- Davis knowingly entered into a contract to perform as a film artist for a third person, in breach of her agreement with Warner Bros
Held:
* Damages were not an appropriate alternative remedy and that an injunction must be granted
* An injunction would prohibit a breach of the original agreement with Warner Bros and enforce Davis to perform her contractual obligations
