Stat. 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. denied) , and is an alternative remedy to damages, Levetz v. In English law, in principle reparation must be done in specie unless another remedy is ‘more appropriate’. Specific Performance in Real Estate Contracts. 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. Second, specific performance may be granted when the subject of the contract is the sale of real property. Ann. Such order are granted when damages are not an adequate remedy and in some specific cases such as land (which is regarded as unique). Overview. This is termed replevin. [8], There is an ongoing debate in the legal literature regarding the desirability of specific performance. 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. Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Specific performance is a unique remedy that may be available in some cases. If a legal remedy will put the injured party in the position he or she would have enjoyed had the contract been fully performed, then the court will use that option instead. A contractual remedy in which the court orders a party to actually perform its promise as closely as possible, because monetary damages are somehow inadequate to fix the harm. Notably, Arizona law construes escrow instructions, supplemental escrow instructions, and even receipts as valid “writings” sufficient to show an agreement between the contracting parties. Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. If the non-breaching party does not wish to perform, he should be sure to cancel the contract as provided in the contract itself. An equitable remedy available for breach of contract. Hence, the statement of a cause of action in a suit for specific performance calls for two kinds of allegations: those that establish the right to recover for breach of contract, and those that are essential to the granting of the equitable remedy of specific performance. Moreover, courts seldom enforce contract clauses that explicitly provide for specific performance in the event of breach. Section 7 clause (x) of court fee act 1870 states that; For specific performance.– In suits for specific performance– of a contract of sale– according to the amount of the consideration, of contract of … In a Business Development and Licensing journal article about performance clauses, Roger Davies of the Pharmaceutical Licensing Group in … To explore … The reason is simple. Specific Performance § 134 (2014) (“To succeed in an action for specific performance of a contract for the purchase of real property, a petitioner must show by clear and convincing evidence that there is a valid contract to purchase real property and that he or she is ready, willing, and able to perform his or her obligations under the contract.”). Actions for Specific Performance or Money Damages for Breach of Real Estate Contract If a party to the contract of sale wrongfully refuses to complete the transaction, the other party may have a legal right to either sue for money damages, or in some instances, to sue for specific performance. Should a party default on his obligation, a court may issue an order for specific performance, requiring a party to perform a particular action. for specific performance of such an agreement. 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. [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. The writing must contain the terms and conditions of all the promises constituting the contract and by whom and to whom the promises are made. In order to stifle fraud, Arizona requires a non-breaching party to prove he or she was “ready, willing, and able to perform” under the contract. To that end, while most cases involve the buyer of real property requesting specific performance from the seller, the law recognizes that the seller has a remedy in specific performance as well. The remedy of specific performance is equitable in nature and governed by equitable principles. The contract required constant supervision. It is virtually impossible to obtain title insurance necessary to convey title while an action for specific performance is pending. See Restatement (Second) of Contracts § 357, cmt. Specific performance is an alternative equitrable remedy to a cause of action for breach of contract. “In order to compel by specific performance the sale of certain land, the contract must be definite and certain.”, Additionally, “[i]t is generally true that where time of performance of an agreement for the sale of realty is not made the essence of the contract, a failure to specify the time of performance will not necessarily defeat specific performance, since it will be implied that performance may be required within a reasonable time.” Suttle, 94 Ariz. at 164, 382 P.2d at 572; see. Money damages are a kind of "substitute specific performance." Performance consists of a personal service. Monetary damages are usually given instead. The lawyers listed in this website practice law only in the jurisdictions where they are admitted. Specific performance is a central contractual remedy but, in Anglo-American law, generally is subordinate to damages. Canton, 156 Ariz. at 470, 753 P.2d at 160 (citing Specific Performance § 126). For example, if A agrees to sell certain shares to B of a specific company which are limited in number and after the payment made by B, if A refuses to sell the shares then B is entitled to recovery of those shares. Finally, specific performance is only available if monetary damages do not adequately compensate the non-breaching party for his loss. 71 Am. At common law, a claimant's rights were limited to an award of damages. Specific Performance. It's usually ordered when monetary damages are not enough. Court fee in Suit For Specific Performance. Severance Agreement Specific Performance Clause Library This Termination Severance Agreement Specific Performance clause library is provided below as a free resource to attorneys and business professionals to customize their legal contracts with specific language found in these clauses. Thus, equity will not compel one party to specifically perform where it cannot compel performance by the other. 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. Specific performance can be granted only by a court in the exercise of its Equity powers, subsequent to a determination of whether a valid contract that can be enforced exists and an evaluation of the relief sought. © 2004-2020. Economists, generally, take the view that specific performance should be reserved to exceptional settings, because it is costly to administer and may deter promisors from engaging in efficient breach. How Might a Real Estate Closing Fall Apart? In other words, a claimant may not simply demand that a party specifically perform on a contract without proving that he or she desired and was able to perform her half of the contract. When one party to a sales agreement breaches the contract by not performing as required by the contract’s terms, the harmed party often does not want monetary damages but desires actual performance. [citation needed]. The doctrine is based on the idea that one party should not be able to force specific performance through equity when the other party cannot do the same. Specific performance means enforcement of exact terms of the contract. The act of visiting or communicating with the attorneys featured in this website by email or other medium does not constitute an attorney-client relationship. Specific performance is available as a remedy to enforce contracts for the sale of real property because the remedy of monetary damages is usually considered inadequate. As a general rule, specific performance is applied in breach of contract actions where monetary damages are inadequate, primarily where the contract involves land or a unique chattel (Personal Property). This clause is where you need to clearly define the intended … In summary, specific performance is an equitable remedy that is available when a party to a sales contract for real property is harmed by the other party’s nonperformance. Often, this does not create any new legal issues outside of a possible breach of contract claim; however, the seller must be careful to strictly follow any cancellation procedures found in the sales contract. This is simply one application of the rule that equity cannot make a decree requiring the performance of personal acts calling for the exer- Moreover, performance based on the personal judgment or abilities of the party on which the demand is made is rarely ordered by the court. We study 2,347 contracts of public corporations to quantify the presence or absence of specific performance clauses in several types of contracts. The term specific performance refers to literal performance of ones obligations under a contract. Additionally, to be enforceable, a contract must also have “mutuality of obligation.” This requirement “consists in the obligation on each party to do, or to permit something to be done, in consideration of the act or promise of the other.”, Accordingly, “an agreement which permits one party to withdraw at his pleasure is void.”. In these cases, specific performance is warranted when the seller establishes that he or she is ready, willing, and able to convey good and marketable title, free and clear of encumbrances or material defects, and there is no indication that the contract was inequitable or that a change in the circumstances rendered specific enforcement of the contract unjust although the relief actually obtained by him or her is the recovery of money—the purchase price—for which he or she may also have a remedy by an action at law. The Equitable Relief clause (also known as a Specific Performance, Irreparable Harm or Injunctive Relief clause) is used to secure special, equitable, remedies for contract breach when money or legal damages would be inadequate. Specific performance requires (1) a valid, binding and enforceable contract (2) compliance with the terms of the agreement by the party seeking specific performance and proof that he is ready, willing and able to perform and (3) the refusal of the other party to perform the contact. Later, the court of equity developed the remedy of specific performance instead, should damages prove inadequate. Specific performance is an alternative to a courts decision to award damages and it is commonly used as injunctive relief in cases involving real property or the disclosure of confidential information. SPECIFIC PERFORMANCE REAL ESTATE SALES CONTRACT . If she sues for specific performance, will she win? Specific performance is a specialized remedy used by courts when no other remedy (such as money) will adequately compensate the other party. See, e.g.. The contract is too vague to be enforced. Specific performance would cause severe hardship to the defendant. 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. 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. See, e.g.. It is typically available in the sale of land law, but otherwise is not generally available if damages are an appropriate alternative. These remedies include filing a lawsuit to collect damages or seeking a court order requiring the infringing party to live up to their obligations. Despite rich theoretical discussions of specific performance, little is known about parties' treatment of the remedy in their contracts. Under Arizona law, when a breach of a sales contract occurs and the contract provides an exclusive procedure for cancellation upon breach, the non-breaching party’s failure to follow that procedure leaves the contract intact and allows the breaching party to cure the breach through specific performance and force the other party to perform on the contract. Specific performance is an equitable remedy that may be awarded, at the trial court’s discretion, for a breach of contract, Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex.App.-Dallas 2007, pet. 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. This is true even where the want of title is caused by the seller’s own action in conveying the property to a third party. Exhibit 10.35 . (c)making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose realisation depends on his own will alone, Unfair Terms in Consumer Contracts Regulations 1999, Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia, http://www.legislation.gov.uk/uksi/1999/2083/schedule/2/made, Guide to specific performance in property contracts, https://en.wikipedia.org/w/index.php?title=Specific_performance&oldid=985131399, Wikipedia articles needing clarification from April 2018, Articles with unsourced statements from April 2018, Creative Commons Attribution-ShareAlike License. Common Law damages are readily available or the detriment suffered by the claimant is easy to substitute, then damages are adequate. Mutuality was lacking in the initial agreement of the contract. Specific performance is the legal concept that anyone who signs a contract is bound to the terms of the contract. It's not just the seller who might get cold feet in a property transaction. An order of specific performance is generally not granted if any of the following is true: Additionally, in England and Wales, under s. 50 of the Senior Courts Act 1981, the High Court has a discretion to award a claimant damages in lieu of specific performance (or an injunction). “It is elementary that before there can be a binding contract there must be mutual consent of the parties to the terms thereof.”. It is usually the opposite of a prohibitory injunction, but there are mandatory injunctions that have a similar effect to specific performance. According to Section 10 of Specific Relief Act 1963 in the following conditions specific performance of the contract is enforceable: … In other words, such a remedy may be granted if the item has sentimental value that cannot be quantified monetarily, such as if the item is extraordinarily collectable or one of a kind. 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