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Specific performance

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Specific performance is a specialized legal tool used in contract law. It is known as an equitable remedy. This means a court issues an order to force a person to complete a specific act. Usually, when a contract is broken, the court awards money called damages. However, specific performance is used when money is not an adequate remedy. This remedy aims to protect the expectation interest of the innocent party. This means the goal is to give them exactly what they expected from the original deal.

The mechanism of specific performance relies on judicial discretion. A judge decides if the remedy is appropriate based on the specific circumstances. To get this order, a claimant must show that the subject of the contract is unique. If a person can simply buy an identical item elsewhere with money, the court will likely deny the request. The court looks for irreparable harm, which is damage that cannot be fixed by a cash payment. In some cases, this is paired with a right of possession. This allows the plaintiff to legally take control of the disputed property.

There are different types of orders that relate to this concept. An injunction is a common subset of specific performance. An injunction can be used to protect real property or confidential information. While many injunctions are prohibitory, meaning they stop an action, some are mandatory. Mandatory injunctions require a person to take a specific action, which makes them similar to specific performance. In the United States, a specific type of order called replevin exists under the Uniform Commercial Code. This allows a court to order the delivery of identified goods to a buyer after payment.

The history of this remedy involves the development of the court of equity. Originally, the common law only allowed claimants to receive money damages. Over time, the court of equity was developed to provide fairer outcomes. It created specific performance for situations where money alone failed to provide justice. In England and Wales, the Senior Courts Act 1981 gives the High Court the power to choose between damages and specific performance. This allows the court to decide which option best places the claimant in the position they would have been in if the contract had been fulfilled.

Specific performance is most frequently applied to land law. Because every piece of real estate is considered unique, money is often seen as an inadequate substitute. In Australia, courts follow strict rules for these orders. There must be a valid and enforceable contract and a threatened breach. The party seeking the order must also be ready, willing, and able to perform their own duties. If the contract is for a speculative purpose, such as future profits from development, a court may hesitate to act. The uniqueness of the land is the primary reason these orders are granted.

However, there are many exceptions where a court will refuse to act. Specific performance is rarely granted for contracts involving personal services. This includes jobs that rely on a person's unique judgment or talent. Courts avoid these because the forced party might perform poorly, and the court cannot easily supervise the work. Other exceptions include contracts that are too vague or those that cause severe hardship to the defendant. If a claimant has "unclean hands," meaning they behaved badly, they may lose their right to the remedy. The contract must also be for valid consideration and not be void or unenforceable.

This legal concept connects to broader debates in economics and philosophy. Economists like Professor Steven Shavell argue that specific performance should be rare. They believe it is costly to manage and can lead to inefficient breaches. They often suggest that money damages are superior for most commercial activities. On the other hand, many lawyers believe specific performance is better because it honors the original promise. There is also a connection to contract theory regarding "at-will" contracts. Research shows that if contracts are too easy to break, people might not make important long-term investments in their business relationships.

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