Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific action, such as to complete the performance of the contract. It is typically available in the sale of land but otherwise is not generally available if damages are an appropriate alternative. 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.
Specific performance is commonly used in the form of injunctive relief concerning confidential information or real property.[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. It is usually the opposite of a prohibitory injunction, but there are mandatory injunctions that have a similar effect to specific performance.
At common law, a claimant’s rights were limited to an award of damages. Later, the court of equity developed the remedy of specific performance instead, should damages prove inadequate. Specific performance is often guaranteed through the remedy of a right of possession, giving the plaintiff the right to take possession of the property in dispute.
As with all equitable remedies, orders of specific performance are discretionary, so their availability depends on its appropriateness in the circumstances. Such order is granted when damages are not an adequate remedy and in some specific cases such as land (which is regarded as unique).
An order of specific performance is generally not granted if any of the following is true:
Specific performance would cause severe hardship to the defendant.
The contract was unconscionable.
Common-Law damages are readily available or the detriment suffered by the claimant is easy to substitute, then damages are adequate. The claimant has misbehaved (unclean hands).
Specific performance is impossible.
The performance consists of a personal service
The contract is too vague to be enforced.
The contract was terminable at will (meaning either party can renege without notice).
The contract required constant supervision.
Mutuality was lacking in the initial agreement of the contract.
The contract was made for no consideration.
Specific performance will not be granted for contracts which are void or unenforceable. The exception to this (in equity) is in relation to estoppel or part performance.
Where an injunction to restrain an employee from working for a rival employer will be granted even though specific performance cannot be obtained. The leading case is Lumley v Wagner, which is an English decision.
Additionally, in England and Wales, under s. 50 of the Senior Courts Act 1981, the High Court has the discretion to award claimant damages in lieu of specific performance (or an injunction). 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.
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. 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.
However, the limits of specific performance in other contexts are narrow. 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 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. Monetary damages are usually given instead.
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. 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.
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. If the goods are identified to the contract for sale and in the possession of the seller, a court may order that the goods be delivered over to the buyer upon payment of the price. This is termed replevin. 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. The relief of Specific Performance is an equitable relief which is usually remedial or protective in nature. 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. Money damages are a kind of “substitute specific performance.” Indeed, it has been proposed that substitute specific performance better explains the common law rules of contract as well, see (Steven Smith, Contract Law, Clarendon Law ).
In English law, in principle reparation must be done in specie unless another remedy is ‘more appropriate’.
There is an ongoing debate in the legal literature regarding the desirability of specific performance. Economists, generally, take the view that specific performance should be reserved for exceptional settings because it is costly to administer and may deter promisors from engaging in efficient breach. Professor Steven Shavell, for example, famously argued that specific performance should only be reserved for contracts to convey property and that in all other cases, money damages would be superior. 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. There is also uncertainty arising from empirical research whether specific performance provides greater value to promisees than money damages, given the difficulties of enforcement.