Specific Performance and Other Injunctions Flashcards
Specific performance rule
Typically, a court will only order specific performance if a party has totally breached a contract or upon an anticipatory repudiation. Specific performance is usually not available if a party has only threatened breach or partially breached.
Courts may order that a breaching party specifically perform the promises of a contract if:
- (1) money damages are inadequate,
- (2) the terms of the contract are certain and definite, and
- (3) it is feasible for the court to supervise the performance.
When are money damages inadequate for specific performance?
The following circumstances suggest that money damages are inadequate:
- (a) Money damages are difficult to prove with reasonable certainty.
- (b) Although damages might be proven with certainty, it is difficult to procure a suitable substitute with money (unique goods).
- (c) It is unlikely that damages can be collected from the defendant (defendant is judgment-proof).
Certain and definite terms requirement for specific performance
All offers must be certain and definite such that a court can determine when there is a breach and the appropriate remedy. An even greater degree of certainty is needed to order specific performance than is needed in order to establish that a contractual obligation exists. The court must be able to determine what it must order a party to do.
Just because a contract lacks some terms does not mean that a court will not order specific performance. If a contract has missing terms, then the court may use the rules of interpretation to discern the intent of the parties and also imply reasonable terms.
Feasibility requirement for specific performance
A promise will not be specifically enforced if the character and magnitude of the performance would impose on the court burdens in enforcement or supervision that are disproportionate to the advantages to be gained from enforcement and to the harm to be suffered from its denial.
Clean hands doctrine
A party that seeks an equitable remedy must come to court with “clean hands.” In other words, the party seeking specific performance must not have engaged in any action that seems inequitable in relation to the contract for which specific performance is sought.
Laches
Laches is an affirmative defense that prevents an equitable remedy if the party seeking the remedy has waited too long to assert his claim. A party asserting the laches defense must prove that
- (1) there was an unreasonable delay, and
- (2) there is prejudice to the adverse party if equitable relief is allowed.
Delay is unreasonable if the party seeking the equitable relief has full knowledge of the harm but intentionally lets time pass without seeking a remedy.
Prejudice to the defendant might occur if, because of the passage of time, there are lost records or it is difficult for witnesses to recall the facts.
Specific performance for real property sales
Buyer’s Remedy: Specific performance is most commonly granted in cases involving the sale of an interest in real property. Historically, damages are presumed inadequate for the buyer since every piece of property is deemed to be unique and the value of a piece of property is often viewed as speculative.
Seller’s Remedy: Specific performance has been granted to sellers as well when money damages are inadequate. In the case of a buyer breach, money damages might prove inadequate if there is no other purchaser for the property or if it is difficult to determine the market value. The breach by a buyer could affect the saleability of the land.
Specific performance for the buyer under the UCC
Specific performance may be decreed where the goods are unique or in other proper circumstances. Traditionally, unique goods were typically understood to include works of art, family heirlooms, and the like. However, the UCC provision for “other proper circumstances” allowed for a number of additional circumstances, such as where there are shortages of a commodity.
A good that is not unique but that is unavailable for purchase elsewhere could be subject to a specific performance decree. If the buyer cannot cover, then this strongly suggests that money damages are an inadequate remedy and specific performance should be granted.
Specific performance for the seller under the UCC
When a buyer breaches, specific performance for the seller is usually the equivalent of a payment of the purchase price. “Action for the Price” provides sellers with a recovery of the purchase price in three scenarios:
- (a) the buyer accepted the goods but has not paid the price,
- (b) the buyer damaged the goods after taking control, or
- (c) the goods cannot be resold.
Specific performance for personal services contracts
A personal services contract has been defined as one where the duties involve a relationship of such personal confidence that the parties intend performance solely by the party obligated. Examples where services are clearly personal include contracts with doctors, lawyers, architects, teachers, actors, performers, artists, and athletes.
Courts never order specific performance on personal services contract.
If a personal services contract is unique or if equivalent services cannot be readily obtained elsewhere, then a court may issue a prohibitory injunction preventing the breaching employee from working for an employer’s competitor. However, a court may choose to not enforce a non-compete clause if its probable result will be to compel the employee to work for the employer or will be to leave the employee without other reasonable means of making a living.
Specific performance for construction contracts
There is a jurisdictional split on whether specific performance will be granted when a contractor breaches a construction contract. The modern trend is to allow specific performance for the contractor breach of a construction contract provided that the circumstances meet the criteria of the common law rule.
To address the feasibility issue, a court order might include a process for arbitration in front of a special master who is familiar with construction disputes. In this way, the court and the judge do not have to supervise the ongoing construction. However, the other elements of certainty and inadequacy of damages must also be met in order for a court to grant specific performance. If another contractor is available to complete the project, then damages are usually adequate.
