Summary
- Specific performance is a court order requiring a party in breach of contract to fulfil their contractual obligations, rather than simply paying monetary compensation.
- Courts award specific performance when monetary damages are inadequate, most commonly in disputes involving unique property such as land or artwork.
Specific performance can be awarded alongside damages, but courts exercise discretion and will consider the conduct of both parties before making such an order. - This article is a plain-English guide to specific performance in contract law for Australian business owners, covering when and how courts may award this remedy.
- The content is produced by LegalVision, a commercial law firm that specialises in advising clients on contract disputes and business law.
Tips for Businesses
If you are pursuing specific performance, document all good-faith efforts to resolve the dispute before going to court. Ensure your own conduct has been reasonable throughout the business relationship. Consider whether monetary damages could adequately compensate you, as courts will only order specific performance where they cannot.
As a business owner in a contractual dispute, you may wish to consider the potential outcomes if you take the other person to court. One of the possible outcomes is an order of specific performance. This court order instructs the other party to undertake some specific act, such as selling a piece of land. A court may award an order for specific performance in addition to damages, which is a money award. This article will explain what specific performance is, some examples of specific performance, and when specific performance may be available for your business.
What is Specific Performance?
Specific performance is a special kind of outcome to a dispute. Typically, a court will make this order when one party has breached their contractual obligations and must undertake a specific action to complete their promises.
For contract disputes brought to court, most courts will award monetary damages or compensation to the winning party. In some instances, however, monetary damages are not an adequate remedy. A court will not lightly make an order for specific performance. This is because English law tends to operate on the principle of liberty. The court does not order a party to undertake a specific action lightly. Therefore, you must convince a court that such an order is the fairest outcome.
Only a court can award an order for specific performance. Therefore, when considering how you wish to resolve a dispute if you ultimately want to force the party to do something specific, you have to go to court. An arbitration or mediation body does not have any legal power to force another person to take a specific action.
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Examples of Specific Performance
Specific performance is most commonly used when the contract is for a property that is unique. Often, this happens in the case of land. For example, you could have a situation where you buy a freehold title over a certain piece of land, and then the other party decides not to sell the land and to keep it instead. If you have a contract for the sale of the land, this would mean that the other party is in breach of contract.
While the court could order the other party to compensate you for the wasted expense plus any fees you incur, you cannot just go and buy an identical piece of land elsewhere. Land is a unique type of property. Obtaining specific performance would mean that your counterparty must sell you the land, as agreed in the contract.
Similarly, if you were involved in a dispute over the sale of a piece of art, you might find an order of specific performance suitable.
Additionally, a court may award specific performance where there is a contractual obligation to make repeated payments. For example, if you are in an agreement that the other party will give you £100 every week for the next 52 weeks and there is a good reason why you need those payments weekly instead of in a lump sum, a court may take this into consideration and give you the remedy.
Importantly, however, a court will very rarely give specific performance if it involves making the other party have to positively do something. In those cases, the court usually considers such an order too burdensome. For instance, say you hired a builder to repair your patio and he refuses. A court is unlikely to force the builder to renovate your property, as you could just easily hire another builder. If the new builder costs more, you could sue the original builder for the difference.
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Obtaining an Order for Specific Performance
As mentioned above, specific performance is a remedy awarded by a court. This means that you will need to file the claim in the appropriate court after you have made good faith efforts to resolve the dispute yourself.
Litigation in court is usually very expensive. If you lose, you may have to pay the other party’s fees.
You should also keep in mind that taking your case to court does not guarantee obtaining specific performance. The court has discretion when making orders and will typically look at what the innocent party has done. As such, your general behaviour and business relationship with the other party may be taken into account. If you have acted unreasonably, they are less likely to grant you an order for specific performance.
When Will a Court Refuse Specific Performance?
Even if you have a strong case, a court can still refuse to grant specific performance. Here are the most common reasons a court may say no:
- you delayed too long – if you waited an unreasonable amount of time before taking action, the court may refuse your claim. This is known as the doctrine of laches.
- the contract is unfair – if the original agreement was one-sided or oppressive, the court is unlikely to enforce it;
- performance is impossible – if the other party genuinely cannot fulfil the obligation, the court will not order them to do so; or
- damages are sufficient – if money would adequately fix the problem, the court will usually prefer that remedy instead.
In England and Wales, courts also consider whether granting the order would cause severe hardship to the other party. The court always weighs up what is fair to both sides before making its decision.
Key Takeaways
As a business owner taking a case to court, you will want to consider the prospect of getting specific performance. Specific performance can be a great way of getting the other party to meet their contractual obligations if they are in a breach of contract. However, it is worth keeping in mind that a court award for an order of specific performance is not straightforward.
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Frequently Asked Questions
What is specific performance?
Specific performance is one potential order a court can make to resolve a contractual dispute, where the other party will be made to fulfil their contractual obligations.
What are damages?
Damages are a standard remedy given by a court for breach of contract. The court simply orders the losing party to pay the winning party a sum of money. This sum should reflect the value of the contract, had the losing party properly performed their obligations.
When can a court award specific performance?
A court awards specific performance when monetary damages are inadequate, such as disputes involving unique property like land or art.
Does specific performance replace damages?
No. A court may award specific performance alongside damages.
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