How to Compel Specific Performance of a Contract - Romano Law

How to Compel Specific Performance of a Contract

Written by Nicole Haff

How to Compel Specific Performance of a Contract

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Updated: August 28, 2021

When there is a breach of contract, the non-breaching party typically sues for monetary damages. There is a specific performance of a contract. In some instances, that party would rather have the court force the other party to comply with the terms of the agreement. In that situation, the non-breaching party can ask the court to grant the “specific performance” of the contract. While many litigants would prefer specific performance over money, the requirements for obtaining specific performance are stringent as courts generally prefer to award monetary damages for a breach.

WHAT IS SPECIFIC PERFORMANCE? 

Specific performance is a type of equitable remedy available in a breach of contract action. It is a remedy based on the concept of fairness. Specific performance recognizes that money may not adequately compensate the non-breaching party in certain situations. When appropriate, the court orders the breaching party to perform its obligations under the terms of the contract, such as delivering the goods or services promised in the agreement. Specific performance is an alternative to seeking monetary damages as compensation for losing the benefit of a contract. Monetary damages are a type of legal remedy with its own set of requirements.

HOW TO OBTAIN SPECIFIC PERFORMANCE 

In order to obtain specific performance in New York, the non-breaching party must prove four elements:

(1) there is a valid and enforceable contract between the parties;

(2) the non-breaching party is “ready, willing, and able” to perform their obligations under that contract;

(3) the breaching party can perform the contract but has failed to do so; and

(4) there is no other adequate remedy at law.

Specific performance is typically awarded when money cannot adequately compensate the injured party and when the contractual obligation is unique or difficult to value.

EXAMPLES 

An award of specific performance is most common in the following situations:

  • Breach of real estate contracts. A piece of property is considered unique. Therefore, specific performance may be warranted. Note that where a party seeks specific performance of a right of first refusal, the plaintiff must be ready, willing, and able to purchase the property, not only when the right ripens, but also when specific performance is ordered.
  • Stock sales. Specific performance may be granted where a contract involves the sale or transfer of stock of a closely held corporation or a cooperative real estate corporation. Such stock is considered unique and difficult to value because it is not available for sale on the open market.
  • Unique goods.Where goods are one-of-a-kind or custom, specific performance may be granted. However, the physical difference alone is not enough if the value can be determined. Furthermore, there must be something unique about the goods beyond their price.

DEFENSES 

Typically, a defendant will try to argue that monetary damages are available and that there is a method to calculate damages with a reasonable degree of accuracy. However, even if the plaintiff has an available remedy at law, specific performance may be granted if the court determines that the remedy at law is not as “certain, prompt, complete and efficient” as the remedy in equity.

As an equitable remedy, a defendant can also defend against an award of specific performance if they can demonstrate serious unfairness, undue hardship or unreasonable prejudicial delay.

A breach of contract can give rise to different remedies depending on the circumstances. It is important to consult an attorney before entering into any agreements and prior to bringing a lawsuit in order to protect your rights and seek appropriate recovery for your losses.

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This Blog is made available by Romano Law PLLC for general informational and educational purposes only, not to provide specific legal advice. By using this Blog you understand that there is no attorney client relationship between you and Romano Law PLLC or any individual contributor. You should consult a licensed professional attorney for individual advice regarding your own situation.

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