Key Takeaways

  • Specific performance is a legal remedy where a court compels a party to fulfill their contractual obligations, typically in cases involving unique goods or real estate.
  • The remedy is typically used when monetary compensation is inadequate or inappropriate.
  • Specific performance can apply to commercial contracts, real estate, rare goods, and in some employment-related disputes (as injunctions).
  • Notable legal doctrines like “clean hands” and the “mutuality of obligation” influence whether courts grant specific performance.
  • Exceptions to the remedy include personal service contracts and undue hardship for the breaching party.
  • Courts consider factors like contract clarity, feasibility of enforcement, and availability of alternatives when deciding to grant specific performance.

A specific performance example is when a party defaults on its contractual obligation and is ordered by the court to fulfill said obligations. An alternative to the much more common award of monetary damages, specific performance is an injunction on a contract dispute often involving sensitive material or real estate. The actions ordered are usually identical or materially similar to those obligated within the contract itself.

When Specific Performance Applies

Civil courts will order specific performance in cases where monetary compensation may not be the most equitable remedy. The term applies specifically to cases of a contract breach. In these cases, the burden of proof is on the plaintiff to show he is not made "whole" by monetary damage awards alone. Instead, the court will order the defendant to do what he has promised to do in the contract. These cases are unusual, as most of the time monetary damages satisfy the plaintiff's case equitably.

Legal Requirements for Granting Specific Performance

Courts do not automatically grant specific performance for every contract breach. Several legal conditions must typically be met before a judge will issue this equitable remedy:

  • Valid and Enforceable Contract: The agreement must be legally binding with clear, definite terms.
  • Inadequacy of Legal Remedies: Monetary damages must be insufficient to compensate the non-breaching party.
  • Mutuality of Obligation: Both parties must be bound to perform under the contract.
  • Feasibility of Supervision: The court must be able to supervise and enforce the specific action without undue difficulty.
  • Plaintiff’s Conduct: The plaintiff must come to court with "clean hands," having acted fairly and in good faith.
  • Certainty of Terms: Ambiguous or vague contractual terms weaken a claim for specific performance.

Judges typically weigh these factors collectively. Even if all conditions are technically met, courts still retain discretion to deny specific performance based on fairness or practicality.

Specific Performance Examples in Commercial Transaction

Uniform Commercial Code (UCC) is a set of laws adopted by states that govern all aspects of commercial transactions, including specific performance. UCC statutes often use the term "replevin" interchangeably with specific performance. In simple terms, replevin refers to a case in which one party has given a security deposit on a contract and the other party has not fulfilled its duty.

Replevin rules apply to specific commercial claims in which real property, and not the monetary value of property, must be transferred in a dispute. In this example, replevin would be ordered instead of a transfer of money if the plaintiff meets the burden of proof. 

Assuming a legal contract is in place, factors determining replevin include:

  • The goods must be unique, otherwise monetary compensation will apply. In the case of real estate transactions, the exact property is completely unique and the contract and price apply only to that specific property. Replevin would apply.
  • Other terms and conditions may also apply in addition to replevin. These include payments for damages or other obligations on behalf of the plaintiff or defendant.
  • The defendant, through arbitration or otherwise, has made attempts to reclaim what was lost or encourage the other party to fulfill its contractual obligation.

Limitations and Exceptions to Specific Performance

There are several scenarios where specific performance is not an appropriate remedy:

  • Personal Service Contracts: Courts do not enforce contracts that would require someone to perform personal services against their will, such as acting, coaching, or manual labor, due to the 13th Amendment prohibition of involuntary servitude.
  • Undue Hardship: If ordering performance would impose a disproportionate burden on the breaching party, courts may deny the request.
  • Availability of Substitutes: If the item or property can be reasonably replaced, monetary damages are considered adequate.
  • Lack of Feasibility: Contracts that require continuous supervision or depend on third-party actions are rarely enforced through specific performance.

Example: If a professional musician is contractually obligated to perform at a private event but cancels, the court will not compel performance. Instead, it may award damages for breach of contract.

Real Estate and Specific Performance

Real estate contracts are among the most common situations where specific performance is granted. Land and property are considered unique, so monetary damages often cannot substitute the promised asset.

Specific performance example in real estate:

  • A buyer agrees to purchase a unique parcel of land. The seller later backs out, even though the buyer is ready and willing to close. The court may order the seller to complete the sale, as monetary damages cannot replicate the value or location of the specific property.

Courts are particularly inclined to grant specific performance in real estate deals when:

  • The buyer has already made a down payment.
  • The property is uniquely suited to the buyer's intended use.
  • The contract terms are clear, and there are no feasibility concerns for enforcement.

Specific Performance Examples for Unique Items

Replevin also refers to non-real estate commercial transactions. For instance, if a buyer purchases a famous art sculpture at auction, and does not receive the sculpture, the buyer may not be made whole by the return of his money, because there is only one such sculpture in the world for him to buy. Therefore a civil court may order the auction house to provide him with his sculpture or face penalty.

Repossession cases also invoke replevin, but in a different way. In cases where the buyer is in default of their purchase contract, the plaintiff has the right to repossess. However, that does not extend to cases where injury or breach of peace would be at stake. So if a mother defaults on a car loan payment, but will lose child support if a creditor shows up to repossess the vehicle, the creditor may seek specific performance ordering her to return the vehicle on her own.

Specific Performance Examples in the Workplace

Requiring someone to perform work as part of a contract is prohibited by the 13th Amendment in the United States, which bars involuntary servitude. Personal property, service contracts, and signed employer-employee agreements are generally exempt from specific performance. That said, if a plaintiff enters a contract fairly, with 'clean hands', an injunction may be issued to bar the defendant from performing the service at question for a specified length of time.

The Charles Flowers case is a classic example of the 'clean hands' rule. Flowers was drafted by two professional football teams, and signed with the New York Giants in 1959. The Giants conspired to keep the draft a secret so that Flowers could play in the college Sugar Bowl in 1960, which was against the rules of college football. Flowers then attempted to withdraw from the contract with the Giants and sign with another team, the Los Angeles Chargers, and returned the money to the Giants.

When the Giants tried to sue Flowers for specific performance, since he was a unique asset and had made an agreement, the fact that the professional team tried to get around college league rules meant they did not have clean hands. Therefore specific performance was denied by the court. 

Case Law and Landmark Rulings

Understanding how courts interpret and apply specific performance can be illuminated through landmark cases:

  • Van Wagner Advertising Corp. v. S & M Enterprises (1986): The court ruled that a lease of a specific billboard location was subject to specific performance because the location was unique and valuable for advertising, and damages wouldn’t suffice.
  • Lucy v. Zehmer (1954): Although not a specific performance case per se, it underscored how courts assess contractual intent. Courts later used this case to support orders of performance where a property seller tried to back out despite showing serious intent to contract.

These examples emphasize the importance of the unique nature of the asset, the definiteness of the contract, and fairness in seeking equitable remedies.

Frequently Asked Questions

1. What qualifies as a specific performance example in business contracts? A supplier refusing to deliver custom equipment after receiving payment could be required by the court to fulfill the contract if the equipment is not easily replaceable.

2. Is specific performance commonly awarded in court? No, it is relatively rare and typically reserved for situations involving unique property or goods, or where monetary compensation is insufficient.

3. Can a court force someone to work under a contract using specific performance? No, personal service contracts are not enforceable through specific performance due to constitutional protections.

4.  Does specific performance apply to digital goods or software? It can, but only if the item is truly unique and not commercially replaceable, such as bespoke software developed for a specific company.

5. How long does it take to obtain specific performance through a lawsuit? It depends on the jurisdiction and case complexity, but these cases can take several months to a few years to fully resolve.

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