Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. Additionally, to be enforceable, a contract must also have “mutuality of obligation.” This requirement “consists in the obligation on each party to do, or to permit something to be done, in consideration of the act or promise of the other.”, Accordingly, “an agreement which permits one party to withdraw at his pleasure is void.”. Specific performance means enforcement of exact terms of the contract. The doctrine is based on the idea that one party should not be able to force specific performance through equity when the other party cannot do the same. Related Content. The relief of Specific Performance is an equitable relief which is usually remedial or protective in nature. [8], There is an ongoing debate in the legal literature regarding the desirability of specific performance. Further, the articles, discussion, commentary, forms and sample documentation contained in this website are offered as general guidance only and are not to be relied upon as specific legal advice. This is true even where the want of title is caused by the seller’s own action in conveying the property to a third party. (c)making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose realisation depends on his own will alone, Unfair Terms in Consumer Contracts Regulations 1999, Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia, http://www.legislation.gov.uk/uksi/1999/2083/schedule/2/made, Guide to specific performance in property contracts, https://en.wikipedia.org/w/index.php?title=Specific_performance&oldid=985131399, Wikipedia articles needing clarification from April 2018, Articles with unsourced statements from April 2018, Creative Commons Attribution-ShareAlike License. © 2004-2020. It is virtually impossible to obtain title insurance necessary to convey title while an action for specific performance is pending. denied) , and is an alternative remedy to damages, Levetz v. In general, an enforceable contract requires three basic elements: 1) an offer, 2) acceptance, and 3) consideration. Mutuality was lacking in the initial agreement of the contract. Under Arizona’s Statute of Frauds, an agreement for “the sale of real property or an interest therein” requires a writing, signed by the parties to be charged. for specific performance of such an agreement. Performance consists of a personal service. In practice, specific performance is most often used as a remedy in transactions regarding land, such as in the sale of land where the vendor refuses to convey title. This Article argues that the remedy of specific performance should be as routinely available as the damages remedy. This clause is where you need to clearly define the intended … Communications from non-clients are not subject to client confidentiality or attorney-client privilege. Succinctly, specific performance is available when there exists: 1) a valid and binding contract; 2) definite and certain terms; 3) mutuality of obligation and remedy; 4) freedom from fraud and overreaching; and 5) lack of remedy at law. Specific Performance in Real Estate Contracts. 2d Specific Performance § 133 (2014) (hereinafter Specific Performance). This is simply one application of the rule that equity cannot make a decree requiring the performance of personal acts calling for the exer- As a general rule, specific performance is applied in breach of contract actions where monetary damages are inadequate, primarily where the contract involves land or a unique chattel (Personal Property). Specific performance would cause severe hardship to the defendant. Specific performance will not be granted for contracts which are void or unenforceable. If the non-breaching party does not wish to perform, he should be sure to cancel the contract as provided in the contract itself. In these cases, specific performance is warranted when the seller establishes that he or she is ready, willing, and able to convey good and marketable title, free and clear of encumbrances or material defects, and there is no indication that the contract was inequitable or that a change in the circumstances rendered specific enforcement of the contract unjust although the relief actually obtained by him or her is the recovery of money—the purchase price—for which he or she may also have a remedy by an action at law. A contractual remedy in which the court orders a party to actually perform its promise as closely as possible, because monetary damages are somehow inadequate to fix the harm. It's usually ordered when monetary damages are not enough. It is typically available in the sale of land law, but otherwise is not generally available if damages are an appropriate alternative. Despite rich theoretical discussions of specific performance, little is known about parties' treatment of the remedy in their contracts. It is typically available in the sale of land law, but otherwise is not generally available if damages are an appropriate alternative. [citation needed]. Specific performance by Practical Law Dispute Resolution An overview of the equitable remedy of specific performance of positive obligations under a contract. In the civil law (the law of continental Europe and much of the non English speaking world) specific performance is considered to be the basic right. However, the limits of specific performance in other contexts are narrow. It is usually the opposite of a prohibitory injunction, but there are mandatory injunctions that have a similar effect to specific performance. Robert D. Mitchell. Specific Performance § 134. Notably, where a contract for the sale of real property is rescinded by mutual consent, the rights of the parties under the contract are extinguished—neither can base any claim thereon, or compel specific performance. [9] In contrast, many lawyers from other philosophical traditions take the view that specific performance should be preferred as it is closest to what was promised in the contract. Indeed, it has been proposed that substitute specific performance better explains the common law rules of contract as well, see (Steven Smith, Contract Law, Clarenden Law ). under current law, the remedy of specific performance is available only at the discretion of the court. Specific performance is almost never available for contracts of personal service, although performance may also be ensured through the threat of proceedings for contempt of court. In addition, the Code allows a court to order specific performance where "the goods are unique or in other proper circumstances", leaving the question of what circumstances are proper to be developed by case law. Finally, because equity will not undertake to do a vain and useless thing, specific performance will not be awarded against a seller in a land contract when the seller has no title to the real property he contracted to convey. The contract required constant supervision. The rationale behind this was that with goods being fungible, the aggrieved party had an adequate remedy in damages for the other party's non-performance. The writing must contain the terms and conditions of all the promises constituting the contract and by whom and to whom the promises are made. In the United States, Article 2 of the Uniform Commercial Code displaces the traditional rule in an attempt to adjust the law of sales of goods to the realities of the modern commercial marketplace. Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. Specific performance is an alternative equitrable remedy to a cause of action for breach of contract. The exception to this (in equity) is in relation estoppel or part performance. A clause excluding liability for_____ acts will not be enforced. Specific performance is an alternative to a courts decision to award damages and it is commonly used as injunctive relief in cases involving real property or the disclosure of confidential information. Should a party default on his obligation, a court may issue an order for specific performance, requiring a party to perform a particular action. A clause excluding acts that are _____ to public policy will not be enforced, and clauses excluding liability for _____ of law will not be enforced. Economists, generally, take the view that specific performance should be reserved to exceptional settings, because it is costly to administer and may deter promisors from engaging in efficient breach. For legal advice on a specific matter, please consult with an attorney who is knowledgeable and experienced in that area. It is powerless either to compel a party to perform the discretionary act of choosing an arbitrator or valuer, or to require such person to act when chosen. Specific performance requires (1) a valid, binding and enforceable contract (2) compliance with the terms of the agreement by the party seeking specific performance and proof that he is ready, willing and able to perform and (3) the refusal of the other party to perform the contact. As with all equitable remedies, orders of specific performance are discretionary, so their availability depends on its appropriateness in the circumstances. In English law, in principle reparation must be done in specie unless another remedy is ‘more appropriate’. Without detailing each component too much, the first two elements are often combined into one affair: mutual consent. The remedy of specific performance is equitable in nature and governed by equitable principles. The act of visiting or communicating with the attorneys featured in this website by email or other medium does not constitute an attorney-client relationship. See, e.g.. Specific performance as part of a contract is when someone signs the document and is bound by the terms of the contract stipulations that require certain services performed or accomplished within the bounds of the clauses. The Permitted Use of the Information. Such damages will normally be assessed on the same basis as damages for breach of contract, namely to place the claimant in the position he would have been had the contract been carried out. Moreover, courts seldom enforce contract clauses that explicitly provide for specific performance in the event of breach. The leading case is, A Kronman, ‘Specific Performance’ (1978) 45 University of Chicago LR 351, S Schwartz, ‘The Case for Specific Performance’ (1979) 89 Yale Law Journal 271, I Macneil, ‘Efficient Breach of Contract: Circles in the Sky’ (1982) 68 Virginia LR 947, This page was last edited on 24 October 2020, at 04:14. In order to stifle fraud, Arizona requires a non-breaching party to prove he or she was “ready, willing, and able to perform” under the contract. Stat. It's sometimes called an "equitable" remedy, because it involves a court using its discretion to order the nonperforming buyer or seller to perform and to complete the contract as if it had … The reason being that land is unique and that there is not another legal remedy available to put the non-breaching party in the same position had the contract been performed. Such order are granted when damages are not an adequate remedy and in some specific cases such as land (which is regarded as unique). This is termed replevin. Such a demand is called “specific performance.” Specific performance is an order by a court that a contract be fully performed according to its terms. Under Arizona law, when a breach of a sales contract occurs and the contract provides an exclusive procedure for cancellation upon breach, the non-breaching party’s failure to follow that procedure leaves the contract intact and allows the breaching party to cure the breach through specific performance and force the other party to perform on the contract. A decree by the court to compel a party to perform its contractual obligations. The reason behind it is that the forced party will often perform below the party's regular standard, when it is in the party's ability to do so. The clause typically contains four elements: Specific performance is available as a remedy to enforce contracts for the sale of real property because the remedy of monetary damages is usually considered inadequate. Thus, equity will not compel one party to specifically perform where it cannot compel performance by the other. Specific performance is another possible remedy in this situation. Specific performance is almost never available for contracts of personal service, although performance may also be ensured through the threat of proceedings for contempt of court. Overview. It is considered an equitable remedy and is used when traditional monetary damages do not suffice to resolve a legal dispute. In other words, such a remedy may be granted if the item has sentimental value that cannot be quantified monetarily, such as if the item is extraordinarily collectable or one of a kind. Specific performance. Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Specific Performance § 134 (2014) (“To succeed in an action for specific performance of a contract for the purchase of real property, a petitioner must show by clear and convincing evidence that there is a valid contract to purchase real property and that he or she is ready, willing, and able to perform his or her obligations under the contract.”). Non-specific performance clauses. One of the traditional areas where this type of remedy is available is in real estate transactions. Specific performance is an equitable remedy that may be awarded, at the trial court’s discretion, for a breach of contract, Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex.App.-Dallas 2007, pet. For example, if A agrees to sell certain shares to B of a specific company which are limited in number and after the payment made by B, if A refuses to sell the shares then B is entitled to recovery of those shares. As a general rule, specific performance will be granted only in cases where there is “mutuality of remedy,” requiring that a remedy must be available to both parties of a transaction in order for either to obtain it. Ariz. Rev. “It is elementary that before there can be a binding contract there must be mutual consent of the parties to the terms thereof.”. Where an injunction to restrain an employee from working for a rival employer will be granted even though specific performance cannot be obtained. “In order to compel by specific performance the sale of certain land, the contract must be definite and certain.”, Additionally, “[i]t is generally true that where time of performance of an agreement for the sale of realty is not made the essence of the contract, a failure to specify the time of performance will not necessarily defeat specific performance, since it will be implied that performance may be required within a reasonable time.” Suttle, 94 Ariz. at 164, 382 P.2d at 572; see. Moreover, performance based on the personal judgment or abilities of the party on which the demand is made is rarely ordered by the court. The reason is simple. To explore … Accordingly, each of the Parties agrees that the other Parties shall be entitled to an injunction or injunctions to prevent breaches of the … The liquidated damage clause in the contract seemed to provide the protection the developer needed, but the protection contained in the poorly drafted provision was illusory, and the Court concluded that specific performance was an available remedy to the Seller. The contract is too vague to be enforced. If he fails to do so, the breaching party may be able to tender full performance and bring his or her own specific performance action. Most commonly ordered … Specific performance is a unique remedy that may be available in some cases. [10] There is also uncertainty arising from empirical research whether specific performance provides greater value to promisees than money damages, given the difficulties of enforcement.[11]. The lawyers listed in this website practice law only in the jurisdictions where they are admitted. If she sues for specific performance, will she win? Professor Steven Shavell, for example, famously argued that specific performance should only be reserved to contracts to convey property and that in all other cases, money damages would be superior. If the non-breaching party can prove there was a contract and that he was willing and able to perform on the contract, he may be able to bring a successful specific performance action. Beware real property owners: The mere filing of a suit for specific performance (regardless of its ultimate success or the merits) can potentially tie up your property for several years, with or without the existence of a lis pendens. Specific performance; Specific performance Primary tabs. Hence, the statement of a cause of action in a suit for specific performance calls for two kinds of allegations: those that establish the right to recover for breach of contract, and those that are essential to the granting of the equitable remedy of specific performance. Money damages are a kind of "substitute specific performance." In other words, a claimant may not simply demand that a party specifically perform on a contract without proving that he or she desired and was able to perform her half of the contract. The action is usually one that has been previously detailed in a contract. In the High Court, it may be granted in addition to or instead of damages. We study 2,347 contracts of public corporations to quantify the presence or absence of specific performance clauses in several types of contracts. The subject matter of the contract must be unique, or an action for damages would be the proper remedy. 71 Am. How Might a Real Estate Closing Fall Apart? An order of specific performance is generally not granted if any of the following is true: Additionally, in England and Wales, under s. 50 of the Senior Courts Act 1981, the High Court has a discretion to award a claimant damages in lieu of specific performance (or an injunction). Furthermore, an “agreement to make an agreement” is not specifically enforceable when it does not set forth all of the essential elements of the future contract. what is specific performance? SPECIFIC PERFORMANCE REAL ESTATE SALES CONTRACT . The Equitable Relief clause (also known as a Specific Performance, Irreparable Harm or Injunctive Relief clause) is used to secure special, equitable, remedies for contract breach when money or legal damages would be inadequate. Traditionally, equity would only grant specific performance with respect to contracts involving chattels where the goods were unique in character, such as art, heirlooms, and the like. Specific performance is commonly used in the form of injunctive relief concerning confidential information or real property. Specific performance is a specialized remedy used by courts when no other remedy (such as money) will adequately compensate the other party. See Restatement (Second) of Contracts § 357, cmt. Under it the plaintiff claims for the specific thing of which he is entitled as per the terms of contract. Specific performance is a legal remedy whereby the judge orders a party to fulfill his contractual duty such as completing a home sale. In a Business Development and Licensing journal article about performance clauses, Roger Davies of the Pharmaceutical Licensing Group in … Canton, 156 Ariz. at 470, 753 P.2d at 160 (citing Specific Performance § 126). Severance Agreement Specific Performance Clause Library This Termination Severance Agreement Specific Performance clause library is provided below as a free resource to attorneys and business professionals to customize their legal contracts with specific language found in these clauses. Second, specific performance may be granted when the subject of the contract is the sale of real property. No, because she can get similar hammers elsewhere. Specific performance is a central contractual remedy but, in Anglo-American law, generally is subordinate to damages. Specific per… Consequently, the general rule is that specific performance can be obtained in only two situations. Therefore, if a prospective purchaser can demonstrate that he or she was at all times ready and willing to perform the contract, specific performance will be available in the absence of a legitimate and articulable equitable defense. Section 7 clause (x) of court fee act 1870 states that; For specific performance.– In suits for specific performance– of a contract of sale– according to the amount of the consideration, of contract of … Despite rich theoretical discussions of specific performance, little is known about parties' treatment of the remedy in their contracts. These remedies include filing a lawsuit to collect damages or seeking a court order requiring the infringing party to live up to their obligations. In summary, specific performance is an equitable remedy that is available when a party to a sales contract for real property is harmed by the other party’s nonperformance. a (1981) (“Specific performance is the fulfillment of the performance due in the contract as nearly as practicable, by the party in breach.”). Court fee in Suit For Specific Performance. The contract was terminable at will (meaning either party can renege without notice). Monetary damages are usually given instead. Later, the court of equity developed the remedy of specific performance instead, should damages prove inadequate. Damages for the breach of a contract for the sale of ordinary personal property are, in most c… § 44-101(6) (West). [clarification needed] While specific performance can be in the form of any type of forced action, it is usually to complete a previously established transaction, thus being the most effective remedy in protecting the expectation interest of the innocent party to a contract. The term specific performance refers to literal performance of ones obligations under a contract. A precarious situation that sometimes arises is when a party breaches a sales contract, leading the other party to attempt to cancel the contract. When one party to a sales agreement breaches the contract by not performing as required by the contract’s terms, the harmed party often does not want monetary damages but desires actual performance. 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