What is specific performance in contract law?

specific performance

Specific performance is a type of equitable relief available in contract law disputes in England and Wales. Unlike the more common remedy of monetary damages, specific performance orders the breaching party to perform their obligations under the contract, rather than merely compensating the injured party with money.

This type of remedy is typically sought in cases where monetary compensation is not seen as an adequate remedy to address the harm caused by the breach of contract.

Examples include the sale of unique items, such as artwork or real estate property, where the specific item or property cannot simply be purchased elsewhere.

The aim of specific performance as a legal remedy is to enforce the original terms of the contract by requiring the breaching party to specifically perform or deliver what was promised.

Court orders for specific performance are only granted under certain circumstances.

Legal basis for granting specific performance

The legal basis for the remedy of specific performance is primarily derived from the  Senior Courts Act 1981, which allows the courts to compel a party to act (or refrain from acting) in a manner that fulfils their contractual obligations.

In addition to statute, the specific performance remedy has also developed under case law that outlines the principles and considerations guiding its application.

Judicial decisions have played a substantial role in shaping the criteria for granting this remedy, balancing the need to enforce contractual obligations with the recognition that not all breaches can be remedied in this manner.

The courts have consistently emphasised that specific performance is not an automatic right. It is granted at the discretion of the court based on the specific circumstances of each case.

A key principle in the application of specific performance is the requirement that the contract must be clear, fair, and capable of specific enforcement without causing undue hardship to either party. This ensures that the remedy is applied in a manner that is just and equitable, reflecting the courts’ broader role in achieving fairness in contractual disputes.

Criteria for granting specific performance

Specific performance is a discretionary remedy, meaning the courts have significant leeway in determining whether to grant it. However, this discretion is exercised within a framework criteria designed to ensure fairness and practicality in enforcement. The following are key criteria considered by courts in England and Wales when deciding on specific performance:

  • Uniqueness of the subject matter: This is often the most compelling reason for granting specific performance. If the subject matter of the contract is unique or rare, monetary compensation might not suffice as the aggrieved party cannot simply purchase a substitute of equivalent value.
  • Adequacy of damages: The courts assess whether monetary damages would be suffice to compensate the aggrieved party. If damages are deemed inadequate, specific performance may be granted.
  • Mutuality: Specific performance may only be ordered if it is enforceable against both parties. This principle ensures fairness in the application of this remedy.
  • Feasibility of enforcement: The courts must consider whether the specific performance can be practically enforced. If the order would require continuous supervision or is otherwise impracticable, it may be denied.
  • “Clean hands”: The party requesting specific performance must come to court with “clean hands.” This means they must not have engaged in misconduct or unfair dealing in the context of the contract in dispute.

Despite these criteria, certain contracts are inherently unsuitable for specific performance. This may include those requiring personal services or involving matters of personal taste or judgment. In these instances, the courts recognise that compelling performance may not be reasonable or ethical.

The application of these criteria highlights the courts’ careful consideration of both the practicalities of enforcement and the underlying principles of equity and fairness in contractual dealings.

Limitations and discretion of the court

The remedy of specific performance, whilst powerful, is not without its limitations. These limitations are grounded in both legal principle and practical considerations. These should be considered to ensure that the application of this remedy aligns with the broader aspects of justice and feasibility.

  • Discretionary nature: Specific performance is a discretionary remedy. This means that even if a case meets all the criteria, the court still has the final say on whether to grant it. The Court will take into account the overall fairness and practicality of this type of order.
  • Public policy and morality: The courts are cautious not to enforce contracts that would lead to outcomes contrary to public policy or morality. For instance, contracts that require personal services cannot be specifically enforced due to the implications for personal freedom and autonomy.
  • Supervision and practicality: Specific performance is generally not granted if the contract involves acts that would require ongoing supervision by the court. They may also refuse to grant the order if the performance would be too difficult to oversee effectively.
  • Existence of alternatives: If the court determines that other remedies, such as damages, would adequately compensate the aggrieved party, specific performance is unlikely to be granted. This is often the case in contracts for the sale of goods that are not unique and can be easily substituted.

Examples of specific performance: Case Law

Beswick v Beswick (1968) AC 58

In Beswick v Beswick, an uncle sold a business to his nephew with the agreement that the nephew would pay an annuity to the uncle’s widow.

After the uncle’s death, the nephew failed to pay the annuity. The Court of Appeal held that specific performance could be ordered to enforce the agreement.

Patel v Ali (1984) Ch 283

In this case, a claim for specific performance was considered following a breach of contract in relation to a house sale.

The seller of the house had become seriously ill and was no longer able to move out of the house.

The court held that specific performance would not be granted because it would cause undue hardship to the defendant.

This case is significant for illustrating the courts’ consideration of fairness and the personal circumstances of the parties when deciding whether to grant specific performance.

Rainbow Estates Ltd v Tokenhold Ltd (1998) 3 EGLR 71

This case highlighted the limits of specific performance concerning contracts involving personal judgment or services. The court was reluctant to grant specific performance where it would require ongoing supervision or involve subjective assessments.

Alternative remedies for a breach of contract

Specific performance provides the most direct approach to addressing breaches of contract. Unlike damages, which compensate the injured party with money, specific performance mandates the fulfilment of contractual obligations as closely as possible to the original agreement.

In contrast, remedies like rescission allow for the contract to be cancelled and the parties returned to their pre-contractual positions. This is usually suitable in cases of misrepresentation or fraud.

Meanwhile, restitution aims to restore any unjust enrichment.

Each remedy serves distinct purposes, with specific performance uniquely positioned to enforce the exact terms of a contract.

What is specific performance in contract law? FAQs

Are there any specific steps a party must take before seeking specific performance in court?

Before seeking specific performance, the aggrieved party should typically demonstrate that they have fulfilled their contractual obligations. They should also be able to show that monetary damages would not adequately remedy the harm caused by the breach. Furthermore, it should be proven that the contract’s terms are clear and that the performance requested is feasible and would not cause undue hardship or require excessive court supervision.

How do courts enforce orders of specific performance?

Once an order for specific performance is granted, the court may issue additional directives to ensure compliance. This may include setting deadlines for performance and detailing the specific actions to be taken. Failure to comply with an order of specific performance can result in legal penalties. These may include fines or, in extreme cases, contempt of court charges.

Can a specific performance order be appealed?

Yes, like other court orders, decisions granting or denying specific performance can be appealed. The appellant must typically show that the court’s decision was based on an erroneous application of the law or that it abused its discretion in granting or denying the remedy. Appeals involve a review of the trial court’s decision for legal or procedural errors.

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