Specific Performance

General

A Specific Performance Order is an order to perform a contract.  As with an Injunction, it is an equitable remedy.  It is the type of remedy originally granted by the Chancery Court.  It is now available in the higher Courts.  However, as with an injunction, an order of specific performance will usually only be granted where damages are not adequate.

The classic example is where a property is purchased.  Because properties are unique it is assumed that damages would not be adequate.  Strictly speaking, specific performance applies where a person has not performed its contractual obligations.  The Court has a discretion as to whether or not to grant it.

Similar conditions such as those applicable to an Injunction will apply.  These include the hardship on the defendant, delay and inequitable conduct.  In order to obtain specific performance, there must be an existing valid contract.  Specific performance will not be applicable to a gift.  Specific performance is usually requested for a contract for the sale of land.  Generally, it will be available to both seller and purchaser.

The right of the court to grant damages in lieu of specific performance is important, as in some cases there will no independent right to enforce the relevant contact under common laws. This may occur, for example, where there is a failure to comply with a statutory requirement, such as that for a note in writing of a contract for the sale of land.

Criteria for Grant

Although the power to grant or withhold an order of specific performance is discretionary, it may not be exercised arbitrarily. In common with other equitable remedies, there are relatively clear criteria by which an award may be granted or withheld.

Acts of part performance may be sufficient to justify an order of specific performance on an equitable basis. Accordingly, damages may be granted in lieu of, or in addition to specific performance. Damages under this statutory power are assessed in the same manner as common law damages.

In order to enforce a contract for the sale of land by way of specific performance, it is necessary to show that there is a concluded contract. Many cases turn on the requirements for a note in writing. As set out in separate sections, acts of part performance may be sufficient to justify enforcement of a contract, that is not evidenced in writing.

A concluded oral contract must exist under the usual contract formation criteria. There must be sufficient acts of part performance, undertaken with an intention on claimant’s part to perform. The defendant must have induced acts, or have stood by, while they were being performed in circumstances where it would be unconscionable and a breach of good faith to allow the defendant to rely on the Statute of Fraud. The acts of specific performance must be unequivocal and be both consistent with and attributable to the particular contract.

The courts will not generally exercise discretion to enforce contracts for the payment of money or the transfer of non-unique personal property. In the case of payment of money, damages will usually be an adequate remedy.. Equally, it is not necessary to compel a purchaser to complete a purchase contract,  as damages will be an alternative remedy. The parties are obliged to mitigate their losses, so that the seller, may in effect be obliged to sell the property in the market and accept damages for compensation.

Sale of Goods

Specific performance is not generally requested for movable items as they can be generally purchased elsewhere. However, where they are unique or their specific performance may be available.  Specific performance will be granted for building contracts or contracts for works provided that the works can be carried out, specified damages are inadequate and the defendant is in possession of the land.

In the ordinary course, specific performance will be refused where the item concerned is an ordinary article of commerce, of no special value or interest. Where, however, an unusual object of rarity or distinct or where damages would otherwise be inadequate, specific performance may be granted.

The Sale of Goods Act gives power to courts to order specific performance of a contract for the sale of goods, which are specific and ascertained. This follows and confirms the position at common law and in equity.

Lack of Mutuality

Courts do not usually grant specific performance if the contract is not mutually enforceable (specifically enforceable on both sides).  If the defendant could not equally have obtained an order of specific performance, it will not generally be available. The example of a contract by a person under a disability is sometimes given as an example. The relevant point of time is the hearing of the claim and not the time the contract was entered.

The courts may grant specific performance, notwithstanding the absence of mutuality. The absence of mutuality is not an absolute bar. It is a consideration in the exercise of discretion. It appears enough that the mutual enforceability is available at the time of judgment, even if this is not later the case.

The court may refuse an order of specific performance even though the contract is enforceable at law and damages might not be available to the claimant. Equity allows parties, relief from mistake and misrepresentation on wider grounds than that allowed at common law grant. Therefore, in some cases, mistake and misrepresentation will be defences to an action for specific performance, notwithstanding that the contract might still be enforceable at law.

Delay

As with other equitable remedies, a delay may be a ground for refusal of specific performance. Delay of a couple of months may be sufficient. This will be much shorter than the period allowed under the Statute of Limitations.

Delay made be excessive if in the circumstances a reasonably assiduous person would have conceded with greater speed and diligence.

Illegality

General defences to contracts available at law are also relevant. If a contract is void and illegal it will not be enforced. A distinction is drawn between contracts which are inherently illegal and contracts which are performed in an illegal manner by one party. Inherently, illegal contracts will not generally be enforced at all.

Where a contract appears to be legal, but is carrying into effect an illegal purpose or is contrary to public policy it may not be enforced.

Contracts may not be enforced on the basis of being contrary to public policy. This does not require the performance to be unlawful in itself. See generally the section on contract law and illegality.

The courts will not readily allow legality as a defence where a contract appears regular on its face. The onus of proving illegality lies on the person who raises it. For example, it is alleged that the parties intended to execute a contract, the way is to avoid or reduce tax this must clearly be shown. The general allegation is not enough. It must be shown that the parties intended to carry out the contract in an illegal manner.

Futility

The Courts will not tend to grant Orders in cases which would require constant supervision leading to numerous applications.  The courts are reluctant to grant equitable remedies, where constant supervision is required. There must be sufficient definition as to what has to be done to comply with the order.

The unwillingness and inability of the courts to undertake a high degree of superintendence is often an obstacle to obtaining specific performance of detailed commercial contracts, with complex, mutually dependent obligations.

Specific performance will not be normally granted in the case of an Order for personal service.  However, in the case of a professional performer Orders have been granted prohibiting breach of the contract.  For example, a person may be prohibited from working for anybody else.

Generally, specific performance would be refused where something is an ordinary article of commerce that can be replaced.  The Sale of Goods Act allows a Court discretion to order specific performance for the sale of goods.  Generally, a contract to pay or lend money cannot be specifically performed because damages will be adequate

Where the defendant’s behaviour is egregious and he has deliberately attempted to take unfair advantage of his breach, the court may order specific performance in the interests of justice, notwithstanding that a greater degree of supervision than might otherwise be permissible,  would be required.

One Party at Fault

Specific performance may be refused on the grounds that it was induced by misrepresentation or mistake.  The misrepresentation or mistake need not be serious enough to render the contract void.  Where the mistake has been contributed to innocently by the claimant, specific performance would be refused.  Where the mistake is solely that the defendant specific performance would not be refused.  Specific performance will not be granted if the consent or performance of the contract is impossible.

A plaintiff who was in breach of his own obligations will not be entitled to specific performance.  He must be ready, willing and able to perform his part of the contract. Breach of a trivial nonessential term will not be critical.  Specific performance would not be granted if it is unfair or causes considerable hardship to the defendant.  This is usually judged at the time the contract is entered.  Subsequent circumstances are generally immaterial.

Damages Instead

Where a person commences proceedings for specific performance hey may afterwards choose to claim damages instead and withdrawn the application for specific performance with the consent of the Court.  Consent of Court may not be necessary.

A Court may grant damages either in addition to or substitution for specific performance.  There may be cases where a Court decides that it is unfair to force performance of the contract but instead orders damages.

Mistake

A mistake may constitute a defence to a claim for specific performance.  This is the case even if a contract is not prevented from coming into being.  Where they are not serious enough to justify rescission in the case of mistake if the plaintiff contributed in any way to misapprehension and misunderstanding specific performance may be refused.  However, if a person makes a mistake without reasonable justification they must be held to their bargain.

Where the plaintiff has contributed to the mistake unintentionally there may be a defence. The mistake may be such that together with consideration such as harshness, hardship and unfairness may make it inequitable to grant specific performance.  Exceptionally supervening hardship may be relevant even if not present at the time.

Unfairness

General considerations of fairness may bear on the discretion as where the claimant has acted in an unconscionable manner to take advantage of a person’s weak position.

As with an injunction, an unreasonable delay in bringing proceedings may make it inequitable that the order is made.  A reasonable person must proceed with substantially greater speed or diligence.

The courts may refuse to order specific performance if it would inflict unnecessary hardship on the defendant. This is the case even though the hardship might not be the claimant’s responsibility. Hardship is judged with reference to the circumstances at the time that the contract’s made. Subsequent hardship will be taken into account, only exceptionally. Otherwise, the law of contract would be too readily circumvented.

In exceptional cases, the subsequent personal circumstances of the defendant may be relevant. Hardship to third parties may also be taken into account. It may also be may also be relevant where the defendant has taken unfair advantage of the claimant.

Greater Willingness to Grant in Some Cases

The courts refuse to grant an Order for performance is futile.  In a number of cases in which persons contracted to buy land who were completely insolvent and incapable under any circumstances of purchasing, the Courts have refused specific performance.  In contrast, specific performance will not be refused simply because the performance is very difficult or may cause the person to be stretched financially.

The courts will rarely grant orders for specific performance of construction, building, and repair contracts. There will usually be too great a degree of intricacy and interdependence with the other parties’ performance. Generally, damages will be an adequate remedy as another builder can usually be employed.

There courts are now slightly more willing  to grant specific performance of contracts to build and repair and they  may do so, in exceptional cases.  In such cases, specific performance may be ordered,  if

• its terms can be sufficiently defined;
• the claimant has a substantial interest in the performance;
• the defendant has an unconditional right to possession of the land; and
• damages are not an adequate remedy.

Traditionally the courts were unwilling to grant specific performance of employment contracts. An order for the specific performance of such contracts would be in vain in smaller workplaces and would require constant supervision. In larger organisations,  the  obligations or mutual trust and confidence may not be destroyed and an order for performance of an employment contract may be made.  See the sections on wrongful dismissal.