SPECIFIC PERFORMANCE “EQUITABLE” REMEDY - Contracts

Question 1

SPECIFIC PERFORMANCE
“EQUITABLE” REMEDY
Definition:

Answer 1

Defendant is required to perform the contract.

Question 2

THE SPECIFIC PERFORMANCE
5-PART CHECKLIST

Answer 2

1. CONTRACT IS VALID/ CERTAIN & DEFINITE
2. CONTRACT CONDITIONS OF PLAINTIFF MUST BE SATISFIED
3. INADEQUATE LEGAL REMEDY ALTERNATIVE
4. FEASIBILITY OF ENFORCEMENT
5. DEFENSES

Question 3

THE 2 FAVORITE BAR EXAM “CONDITIONS” FACT PATTERNS
Bar Exam Tip: Both fact patterns typically involve land sale contracts.

Answer 3

1. DEFICIENCIES FACT PATTERN
2. TIME OF THE ESSENCE CLAUSE FACT PATTERN

Question 4

DEFICIENCIES FACT PATTERN

Answer 4

Seller cannot deliver the agreed upon consideration.

(Usually involves the quantity of land.)

Question 5

DEFICIENCIES FACT PATTERN Threshold Inquiry:

Answer 5

Who is the plaintiff? Is it the seller or the buyer?

Question 6

SELLER as Plaintiff in Deficiency Fact Pattern

Answer 6

(i) Can specifically enforce the contract if the defect is minor.
(ii) Cannot, however, enforce the contract if the defect is major.

• unless: The seller can cure the defect by closing.

Question 7

Buyer as Plaintiff in Deficiency Fact Pattern

Answer 7

(i) Can enforce the contract even if the defect is major.
(ii) Cannot, however, enforce the contract if the defect is very major.

Bar Exam “Imperative”: If you decide that specific performance should be granted under the rules above even though a defect still remains, you must include a sentence noting that the court will lower the purchase price to take into account this defect in consideration.

• this is called abatement

Question 8

TIME OF THE ESSENCE CLAUSE

Answer 8

Buyer does not meet contract condition of timely performance.

Question 9

Trigger for time of essense clause

Answer 9

Time of Essense clause included with forefiture provision.

Buyer will have made a late payment.

This triggers the time of the essence clause and its forfeiture provision.

Seller wants to keep both the land and any performance rendered to date.

Buyer will bring a lawsuit for specific performance.

Question 10

Equitable Maxim:

Answer 10

Equity abhors forefiture

Question 11

What Factors Court Can Look at to Avoid the Harsh Result of a Forfeiture?

Answer 11

(1) Loss to seller is small.
(2) Tardiness is de minimis.
(3) Waiver (seller has accepted late payments in past).
(4) Buyer would suffer undue hardship.

Question 12

INADEQUATE LEGAL REMEDY ALTERNATIVE
What Is The Basic Alternative?

Answer 12

Money Damage

Question 13

THE FAVORITE BAR EXAM ISSUE: THE “UNIQUENESS” PROBLEM
The Concept: If the property is “unique,” then even if plaintiff received money damages, he could not simply go out and buy it. It would not be available.
Threshold Inquiry:

Answer 13

Determine whether contract was for the sale of real or personal property.

Question 14

Real Property and Uniqueness

Answer 14

All land is unique even if all is identical

Question 15

PERSONAL PROPERTY
General Rule:

Answer 15

Not unique and thus damages adequate

Question 16

Exceptions to the PERSONAL PROPERTY General Rule:

Answer 16

(1) One of a Kind or Very Rare
(2) Personal Significance to Buyer
(3) Circumstances Make Chattel Unique

Question 17

BAR EXAM FAVORITE ISSUE
LIQUIDATED DAMAGES CLAUSES General Rule:

Answer 17

A liquidated damages clause does not make money damages adequate. Specific performance is still available.

Question 18

Exceptions to the LIQUIDATED DAMAGES CLAUSES General Rule:

Answer 18

Where the clause provides that this is to be the “only remedy”

Question 19

FEASIBILITY OF ENFORCEMENT
PERSONAL SERVICES CONTRACT ENFORCEABILITY
RULE:

Answer 19

They are not specifically enforceable.
Reasons:

(1) Enforcement Problem
(2) Involuntary Servitude

Question 20

FEASIBILITY OF ENFORCEMENT

COVENANTS NOT TO COMPETE RULE:

These are enforceable if a 2-part test is met:

Answer 20

(1) The services are unique, and
(2) The scope (geographic & duration) is reasonable

Question 21

DEFENSES
EQUITABLE DEFENSES

Answer 21

1) UNCLEAN HANDS
2) LACHES
3) UNCONSCIONABILITY

Question 22

CONTRACT DEFENSES

Answer 22

1) MISTAKE
2) MISREPRESENTATION
3) STATUTE OF FRAUDS

Question 23

BAR EXAM FAVORITE:
STATUTE OF FRAUDS/PART PERFORMANCE DOCTRINE PROBLEM
How Do You Spot The Problem?

Answer 23

(i) The contract must involve land. It could be either a land sale contract or one to make a testamentary disposition of land.
(ii) This contract will have been an oral contract.

Defendant now raises the Statute of Frauds as a defense to specific performance.

Question 24

Once you have spotted and set out the problem for Statute of Frauds, discuss the Rule.

Answer 24

If one has rendered

(i) valuable part performance,

(ii) in reliance on the contract, this will take the case out of the Statute of Frauds and specific performance will be
granted.

Question 25

What is Valuable Part Performance?

Answer 25

(i) Payment (in whole or part)
(ii) Possession
(iii) Valuable Improvements
(iv) Valuable Services

Top 3 are taken together

Valuable services alone is sufficient

Question 26

RESCISSION
“EQUITABLE” REMEDY
Definition:

Answer 26

The original contract is considered voidable and rescinded.

Question 27

Rescission requires a 2-step analysis.

Answer 27

1. DETERMINE IF THERE ARE GROUNDS FOR RESCISSION
2. DETERMINE IF THERE ARE VALID DEFENSES

Question 28

GROUNDS for Recission: GENERAL:

Answer 28

They all deal with K formation

(i) Mistake
(ii) Misrepresentation
(iii) Coercion
(iv) Undue influence
(v) Lack of capacity
(vi) Failure of consideration
(vii) Illegality.

Question 29

Recission for mutual mistake is granted if:

Answer 29

Material; not Collateral

Question 30

Recission for unilateral mistake is granted if:

Answer 30

Generally not allowed

Exception:

Non-mistaken party knows or should have known of the mistake

Modern Trend Exception
The mistaken party would suffer undue hardship if there is no rescission.

Question 31

Recission for misrepresentation mistake is granted if:

Answer 31

Actually relied upon

Question 32

Defenses to Recission

Answer 32

1. UNCLEAN HANDS
2. LACHES

Negligence is inadequate

Question 33

REFORMATION
“EQUITABLE” REMEDY
Definition:

Answer 33

Changes written agreement to conform with the parties’ original understanding.

Question 34

Reformation requires a 3-step analysis.

Answer 34

1. DETERMINE IF THERE IS A VALID CONTRACT
2. DETERMINE IF THERE ARE GROUNDS FOR REFORMATION
3. DETERMINE IF THERE ARE VALID DEFENSES

Question 35

GROUNDS FOR REFORMATION

Answer 35

1. Mistake
2. Misrepresentation

Question 36

Defenses to Reformation

Answer 36

1. UNCLEAN HANDS
2. LACHES