Topic 2: Contract Specific Performance

Question 0

What must a Plaintiff show to get an order for Specific Performance?

Answer 0

1. Must fulfil the jurisdictional requirements; and

2. Must not be ruled out by a discretionary factor

Question 1

What is Specific Performance?

Answer 1

It is an order granted by the court which requires the Defendant to perform the contract according to it’s terms.
It puts the Plaintiff in the exact position they would be had the contract been performed.

Question 2

What are the three Jurisdictional requirements?

Answer 2

1. Must be a breach of contract; and
2. Legal remedies must be inadequate; and
3. The Plaintiff is ready, willing and able to perform.

Question 3

What can amount to a breach of contract and what authority?

Answer 3

Turner v Bladin:

1. Where D threatens to refuse to perform it’s contractual obligations; and
2. Where there are multiple obligations to be performed in the future, a breach of any one of the obligations will suffice.

Question 4

What are the facts of Turner v Bladin?

Answer 4

• Was a contract for a business. The purchase price was to be paid in instalments every 6 months
• Purchaser didn’t pay the first instalment when due
• Vendor sought Specific Performance.
• Purchaser argued can’t get SP until all the instalments were due.

HC held:
- Sufficient that the D failed to pay one, even a threat of breach would suffice.

Question 5

When will legal remedies be inadequate?

Answer 5

1. Usually with regards to a sale of land because it’s unique: Holland v Goltrans

Question 6

Can SP be recovered for a sale of goods?

Answer 6

Not if there is a close substitute or exact product available in the market.
It is only where:
1. There is no substitute such as a unique painting that common law damages are inadequate; OR
2. IT cannot be obtained within a reasonable time (Dougan v Ley)

Question 7

What are the facts of Dougan v Ley?

Answer 7

• Taxi License registration
• There are a limited number of taxi licenses at any given time and government has control over it.
• So they are not unique, but rare opportunity.

HC Held:

• SP available. If they awarded common law damages, wouldn’t be sufficient because it was a rare opportunity; and
• It was not known when another opportunity would arise.

Question 8

Why must a Plaintiff be ready willing and able to perform?

Answer 8

• Equitable maxim: He who seeks equity must do equity.

- The courts are concerned with performing the ENTIRE contract, not just the D’s obligations: Mehmet v Benson

Question 9

What are the facts of Mehmet v Benson?

Answer 9

Regarding P being ready, willing and able to perform.

• Contract for sale of land to be paid in instalments.
• It had a term saying time was of the essence therefore anything that had a time limit, time was of the essence.
• Purchaser late in paying a number of instalments
• Vendor just accepted late payments, didn’t terminate.
• Eventually vendor terminated based on purchaser’s repeatedly late payments.
• Purchaser brought action for SP

Court Held:

• Conduct of vendor made purchaser to conclude instalments would be accepted. This amounted to a waiver of the essential term.
• Now all that had been bargained for was payment of the entire purchase price, not on any time limit.
• Mere fact purchaser paid late was not indication they were not ready, willing and able, it was just simply late.
• So when breach is trivial or minimal non compliance, doesn’t preclude other party from bringing claim for SP (this will depend on facts of each case).

Question 10

What is the relevance of Green v Somerville?

Answer 10

It’s a case on the plaintiff being ready, willing and able to perform.

• Contract for sale of land. Purchase price not paid by purchaser on date of settlement.
• Term of the contract was that time was of the essence.
• Therefore vendor could terminate, but didn’t.
• Vendor entered into a new agreement setting a new settlement date. The purchaser was to pay rent up until the new settlement date where purchaser would have to pay full price.
• On that date, P tendered purchase price, but vendor ha d changed his mind and refused to accept balance of purchase moneys.
• Vendor argued P had failed to pay interest on balance which was a contractual provision in the previous contract.
• P however assumed new agreement had knocked out the old agreement.

Court held:

• On the specific facts of the case, the vendor had not waived the requirement to pay interest.
• Question was: Was P ready, able and willing to pay on the correct interpretation (interest included) or only on his own interpretation (no interest and if so it meant can’t get SP).
• Court held: P would have been ready willing and able even if under the correct interpretation, it was just mistake as to view.
• SP Granted.

Question 11

What are discretionary factors?

Answer 11

They are factors, which even though jurisdictional requirements are fulfilled, can bar an order for Specific Performance.

Question 12

What are the types of discretionary factors?

Answer 12

1. Constant Supervision/Contracts for Personal Services
2. Lack of Mutuality
3. Futility and Impossibility
4. Unconscionable conduct of Plaintiff
5. Mistake and Hardship; and
6. Delay

Question 13

What is the Constant Supervision and Contracts for Personal Services discretionary factor, and what are the cases?

Answer 13

This is where, the person’s obligation is contingent upon somebody else performing their obligations at a particular standard of quality over a long period of time.
In those circumstances, a court can’t order SP because it requires constant supervision to make sure the parties carry out their obligations to the necessary standard.

Cases:

1. JC Williamson v Lukey; and
2. Gillespie v Whiteoak

Question 14

What are the facts of JC Williamson v Lukey?

Answer 14

• The owner of a theatre granted lease to a shop selling confectionary to go into theatre and sell to audience.
• Contract contained a number of conditions and precise ways oblgiaitons had to be performed such as certain quality and employees had to dress a specific way.
• Theatre owner decided to revoke license, Lessee commenced action for SP.

Court held:

• D’s obligations to let P into theatre was dependent upon P performing it’s obligations, which was to happen on a daily basis.
• The court would have to grant SP on every single occasion the P’s employee try to go into theatre.
• SP not available UNLESS IT’S COMPLETE RELIEF and the contract is carried into it’s fully and final execution.
• Impractical to order SP because issue will arise again.
• No grant of SP.

Question 15

What are the facts and relevance of Gillespie v Whiteoak?

Answer 15

• Contract for computer software support agreement (personal services)
• P bought computer systems fro mD and also had software support agreement where D would update and modify on a periodical basis.
• P applied for mandatory injunction (treated as SP)

Court held:

• Clearly for personal service and had to be performed over a continued period
• Different from JC Williamson because not an issue about quality, just that it had to be done.
• So D had to perform it’s obligations, didn’t depend on P’s obligations
• SP granted because no constant supervision problem.

Question 16

What is the lack of mutuality problem and the case?

Answer 16

The court is enforcing the entire contract, this must mean both sides must be ready willing and able to perform. 
To figure out: 
- Swap the positions
- Consider whether D would get SP. 
- If not, P can't get SP.

Case: Price v Strange

Question 17

What are the facts of Price v Strange?

Answer 17

• P tenant entered into agreement with D landlady, that if tenant carried out repairs, LL would grant him new lease.
• P started performing renovation, but LL interfered and stopped him. She insisted she complete the work
• By this time, LL was already accepting higher rent.
• Eventually she completed repairs and refused to grant tenant new lease so P sought SP

Court held:

• grant of a new lease conditional upon tenant carrying out repair work. But he hadn’t because LL stopped.
• Lack of mutuality problem because D couldn’t enforce obligations against P because renovations were already completed to P didn’t have obligations, so normally would fail.
• However, D stopped P from completing made a difference.
• QUestion to answer: would SP granted without injustice or unfairness to D?
• Court said it could make an order to prevent injustice from occuring provided:
  
  1. P ready, willing and able to perform;
  2. P has been prevented from completing performance; and
  3. D can be properly protected.
• So D could be properly protected by paying her for what she had completed and grant SP.
• This was because D had already accepted higher rent, so she was indicating waiver of lack of mutuality problem.
• So SP granted, but P pay the D for work done by done her.

Question 18

What is the problem with futility and impossibility?

Answer 18

• Impossibility means it is impossible for the D to comply with an order of SP e.g. if the particular item is destroyed.
• Futility would be where it would be useless to order SP for some reason for example:
  
  • In Price v Strange - under normal circumstances, futile to order SP because P didn’t have any obligations.

Question 19

What is a case for impossibility discretionary factor?

Answer 19

Holland v Goltrans: Court held even though can order SP, can order other remedy analogous to SP.

Question 20

What are the facts of Holland v Goltrans?

Answer 20

• Contract for sale of land.
• Land not conveyed on settlement date becuase it was compulsorily acquired by the Qld Gov, so impossible to perform.

Court held:

• Obviously SP refused on grounds of impossibility as Goltran no longer had title to land.
• However P had proprietary claim over compensation payment by gov to G for the land because if no compulsory acquisition, G would have been required to hand over land.
• However compensation paid to G was more than purchase price, could P get all?
• Court held, if P had acquired land pursuant to the contract, he would be entitled to the increase in value so yes, profit goes to P.

Question 21

What are the categories of mistake as a bar to SP and their consequences?

Answer 21

1. Mistakes preventing a contract from coming into existence “void ab initio” - absolute bar to SP because there is no contract to enforce
2. Mistakes entitling one party to rescind - this operates as a bar to SP
3. Mistakes that don’t fall into either categories.

Question 22

What if the mistake is an insignificant mistake?

Answer 22

An insignificant mistake is one that doesn’t render a contract void ab initio or give mistaken party an entitlement to rescind a contract.
It can operate as a bar provided:
1. It is some sort of mistake, need not be significant: and
2. Forcing the mistaken party to perform causes unreasonable hardship to them.

Question 23

What amounts to reasonable hardship in the discretionary factor of insignificant mistake?

Answer 23

Not just any degree, it must be “OPPRESIVE’ - Slee v Worke

Question 24

What are the facts of Slee v Warke?

Answer 24

• D granted lease to P.
• When parties in negotiation, assumption was that P would have option or purchasing hotel DURING first year of lease
• Mistake in drawing up lease that said P only have option of purchasing hotel AFTER first year of lease.
• This was not intention of parties, P was aware but though D changed his mind.
• First year passed, P didn’t exercise option, D thought he didn’t want to, but the moment first year over, P exercised his option
• D unhappy and refused
• P brought action for SP.
• D argued mistake and it would case D hardship. The hardship being: it would be less profit for D because rent would be higher in the years after the lease

Court held:

• It was D’s commercial disadvantage. It was hardship because it was less valuable.
• However not sufficient degree of hardship to justify refusing SP.
• SP granted.

Question 25

What is the discretionary factor of unconscionable conduct on the part of P and case authority?

Answer 25

Where the Defendant in an action for SP would have been able to rescind the contract on grounds of undue influence or unconscionable dealing, then SP is barred - Blomley v Ryan

Question 26

What are the facts of Blomley v Ryan?

Answer 26

• Contract for sale of land
• D, Ryan, was 70 years old and had alcoholic issues and mind impaired.
• At time of entering into contract, he was drinking, so incapable of forming rational decisions about business
• After entering into contract, D became sober and refused to transfer land
• P brought action for SP.

Court held:

• He suffered from special disadvantage of alcoholism.
• Further P knew of this and actively encouraged R to drink by bringing bottle of rum to negotiations
• Unconscionable dealing on part of P
• If D had brought action, he would have been entitled to rescind contract.
• So bar to SP for P.

Question 27

What is the discretionary factor of delay and case?

Answer 27

• Where ther eis a delay in P commencing proceedings ONLY where it would cause:
  
  1. Unfairness;
  2. Injustice; or
  3. Prejudice
     To the other party, then SP is barred.

Case: Laches

Question 28

When does the time start to run for the discretionary factor of DELAY?

Answer 28

• From the time P knows of the FACTS giving rise to a claim for SP, not when they know they have an actual claim.