Specific performance in contract law entails ordering a party to fulfill promised duties when monetary damages are deemed insufficient. This remedy is sought to restore the injured party to the position they would have been in had the contract been executed as agreed upon. The concept of specific performance is examined through various scenarios and principles such as comparing value, mitigation, foreseeability, and irreparable injury in legal disputes.
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Comparisons of Value Mitigation Foreseeability Liquidated damages Specific performance
Specific performance Specific performance = ordering a contracting party to perform the promised duties. You can only get specific performance if money damages are inadequate to put the injured party in as good a position as he or she would have been if the contract had been performed as promised.
An Equitable Remedy Two principles Equity will not act if there is an adequate remedy at law (=money damage are adequate). Equity will act only to prevent an irreparable injury.
Irreparable Injury Irreparable injury in general: Involves a comparison between: (1) acting to prevent a threatened injury; and, (2) compensating for the injury once it occurs. In contracts: a comparison between: (1) compelling performance; and, (2) compensating for non-performance.
Laclede Gas Co. v. Amoco Oil Co. Laclede and entered into a written agreement which was designed to provide central propane gas distribution systems to various residential developments . . . The agreement contemplated that as individual developments were planned the owners or developers would apply to Laclede for central propane gas systems. If Laclede determined that such a system was appropriate in any given development, it could request Amoco to supply the propane to that specific development.
Money Damages Adequate? Why is this relevant? The contract involved . . . is for a long-term supply of propane to these subdivisions. The other two contracts under which Laclede obtains the gas will remain in force only until March 31, 1977, and April 1, 1981, respectively; and there is no assurance that Laclede will be able to receive any propane under them after that time . . . Additionally, there was uncontradicted expert testimony that Laclede probably could not find another supplier of propane willing to enter into a long-term contract such as the Amoco agreement, given the uncertain future of worldwide energy supplies. And, even if Laclede could obtain supplies of propane for the affected developments through its present contracts or newly negotiated ones, it would still face considerable expense and trouble which cannot be estimated in advance in making arrangements for its distribution to the subdivisions. The contract is unique not easily replicated in the market.
2-716, Official Comment 2. . . . Specific performance is no longer limited to goods which are already specific or ascertained at the time of contracting. The test of uniqueness under this section must be made in terms of the total situation which characterizes the contract. Output and requirements contracts involving a particular or peculiarly available source or market present today the typical commercial specific performance situation, as contrasted with contracts for the sale of heirlooms or priceless works of art which were usually involved in the older cases. However, uniqueness is not the sole basis of the remedy under this section for the relief may also be granted "in other proper circumstances" and inability to cover is strong evidence of "other proper circumstances."
Personal Service Contracts For a personal service contract, imagine being Oprah s personal assistant Close relationship Personal supervision If Oprah breaches the contract by wrongfully terminating your employment, can you get specific performance?
The Answer Is No Reasons Money damages adequate in most cases Other considerations: Don t order people back into a failed relationship Costs time, money of supervision. Pavoratti
Cost and Time Considerations Difficulty of supervision Cost to the judicial system Cost of performance for the breacher
Money damages inadequate? No Yes Excessive cost to defendant or courts? No specific performance Yes No Against public interest? No specific performance Yes No specific performance No specific performance While a court may refuse to grant specific performance where such a decree would require constant and long-continued court supervision, this is merely a discretionary rule of decision which is frequently ignored when the public interest is involved. . . .
Money damages inadequate? No Yes Excessive cost to defendant or courts? No specific performance Yes No Against public interest? No specific performance Yes No specific performance No specific performance Here the public interest in providing propane to the retail customers is manifest, while any supervision required will be far from onerous.
Walgreen v. Sara Creek (1992) Walgreen operated a pharmacy in the Southgate Mall Milwaukee, beginning when it opened in 1951. In the lease, the landlord, Sara Creek, promised not to lease space in the mall to anyone else who wanted to operate a pharmacy or a store containing a pharmacy. In 1990, Sara Creek told Walgreen that it was going to buy out the anchor tenant and put Phar Mor deep discount chain in its place. Phar Mor s store would occupy 100,000 square feet, of which 12,000 would be occupied by a pharmacy the same size as Walgreen s. The entrances to the two stores would be within a couple of hundred feet of each other.
Money Damages Inadequate? Walgreen sued for breach of contract and asked for an injunction specific performance--against Sara Creek s letting the anchor premises to Phar Mor. Sara Creek argued that Walgreen had failed to show that money damages were inadequate. Walgreen argued that damages would be very difficult to compute because they included intangibles such as loss of goodwill.
Inadequate? Reduced profits would be difficult to calculate. Walgreen would have had to project its sales revenues and costs over the next ten years, and then project the impact on those figures of Phar Mor s competition, and then discount that impact to present value. Sara Creek presented evidence of what happened (very little) to Walgreen when Phar Mor moved into other shopping malls in which Walgreen has a pharmacy, and it was on the right track in putting in comparative evidence. But there was a serious question whether the other malls were actually comparable to the Southgate Mall.
Masons House Mason hired Fly-By-Night contractors to build a house. When Fly-By-Night completes the house, Mason discovers a number of serious defects. If the house had been completed as promised, it would have had a market value of $1,000,000. As is, it has a market value of $800,000. It would cost $400,000 to fix the defects that account for this reduction in value. The resulting house would have a market value of $1,000,000. Mason sues for specific performance. Can Mason get specific performance? (a) Yes (b) No
The Undeeded Property On July 24, 1959 Mrs. Baker died. Mr. Baker, who was blind and 86 years old, could not be left alone, so the Hendersons moved into the Baker home. On August 11, 1959, Baker and the Hendersons executed a contract under which Baker would deed his house to them in exchange for their care of him. 18 days after the execution of this agreement, Baker died without deeding the property to the Bakers. Should the court order the execution of the deed? (a) Yes (b) No
The Sign Michaels leases to Van Wagner advertising space on a building (cars exiting the Mid-Town tunnel into Manhattan could see the ads). Shortly after entering the lease, Michaels decides to tear down the building and cancels the lease with Van Wagner. This is a breach. Van Wager sues for specific performance. The court will not grant specific performance. The court s reason must be the money damages are adequate. (a) Yes (b) No
Philly Cheesesteak Jones runs the Philly Cheesesteak franchise in Los Angeles; Philly Stake, Inc., the franchisor, is located in Philadelphia. Jones and Rizzo, the President and CEO of Philly Stake, have gotten into an argument over Philly Stake s corporate strategy. In retaliation, Philly Stake has been late in delivery of supplies for the last four months. Jones sues for specific performance. The obligations of the parties are spelled out in great detail in the franchise contract. The following fact would be relevant to specific performance: the contract requires that Philly Cheesesteak use only beef supplied by Philly Stake. (a) Yes (b) No
Thompson v. Commonwealth Commonwealth of Virginia has a contract with Thompson to produce electrical voting machines. Thompson fails to deliver. The Commonwealth sued for and obtained specific performance. Assume it would be difficult for the Commonwealth to find replacement machines in the market. Would that fact be relevant to granting specific performance. (a) Yes (b) No
