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August 25, 2023 | BusinessContract DraftingGeneral

How to Compel Specific Performance of a Contract

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Author(s)
Olivia Loftin

Associate Attorney

Ashley Sohn

Paralegal

In the world of business, contracts are a fundamental part of daily operations.  They establish the terms of an agreement between two or more parties and dictate the obligations and responsibilities of each.  When one of the parties breaches the contract, causing the other party to suffer losses, the non-breaching party typically sues for monetary damages.  However, there is another option for recovery known as “specific performance.”

What is Specific Performance?

Specific performance is an equitable remedy where the court orders the breaching party to fulfil its obligations under the terms of the contract.  This could include requiring the defendant to deliver the goods or services promised in the agreement.  This remedy recognizes that sometimes, money may not adequately compensate the non-breaching party for the losses they have suffered.

How do You Obtain Specific Performance?

The plaintiff must prove several elements to obtain specific performance.  First, the plaintiff must show that there is a valid and enforceable contract between the parties.  Second, the plaintiff must demonstrate that they are ready, willing, and able to perform their obligations under that contract.  Third, the plaintiff must prove that the breaching party can perform under the contract but has failed to do so.  Finally, the plaintiff must show that 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.  For example, if a breach of contract involves a piece of real estate or stock of a closely held corporation, specific performance may be warranted as these items are considered unique and difficult to value.

Can the Defendant Argue Against Specific Performance?

Yes, a defendant can argue that monetary damages are available and that there is a method to calculate damages with a reasonable degree of accuracy.  In the event that the plaintiff possesses an existing legal remedy, it remains within the court’s purview to potentially grant specific performance if it determines that the available legal remedy does not meet the standards of being “certain, prompt, complete and efficient” in comparison to the equitable remedy.  In addition, a defendant can also defend against an award of specific performance by demonstrating serious unfairness, undue hardship or unreasonable prejudicial delay.

Conclusion

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

 

Photo by Leon Seibert on Unsplash
Tags:  agreement,  breach o,  contract
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