Contracts act as the glue that holds all parties to an agreement accountable for their promises. When one of the parties does not hold up their end of the bargain, it is called a breach of contract. Sometimes, money is simply not enough of a remedy for a breach of contract. In these cases, we turn to the concept of specific performance of the promises made in the contract. This blog will explain how specific performance offers a unique remedy in contract disputes.
What is Specific Performance?
Specific performance is a legal remedy that forces a party to fulfill their contractual obligations, instead of just giving the other party money for breaking the contract. Specific performance of a contract can only be used in unique situations or when money really cannot make up for the breach. It’s use depends on the nature of the agreement, the circumstances of the breach, and the ability to make the other side whole for the breach.
Applicable Unique Situations – Real Estate Contract and Art
An example of a unique situation where the remedy of specific performance can be used is in the purchase of real estate. If two people agree to transact in a property (buyer agrees to sell to the seller), but then the seller decides to back out, monetary compensation would not be sufficient to make the buyer whole. In those cases the buyer can ask for specific performance of the contract and actually force the seller to sell. This may result in a situation where a court orders specific performance, compelling the seller to transfer the property as originally agreed.
In 2016, the Pennsylvania Superior Court reaffirmed the concept of specific performance in Oliver v. Ball No. 1602 WDA 2014 in a breach of a real estate sales contract, stating that “Specific performance generally is described as the surrender of a thing in itself, because that thing is unique and thus incapable—by its nature—of duplication.” Oliver v. Ball, 2016 PA Super 45, 136 A.3d 162, 166. Most often specific performance is used for the sale or transfer of land or real estate. Real estate is considered to be inherently unique.
A second example is a situation where an artist agrees to paint a mural for an event, then the artist says that they will no longer be painting the mural, a court might order them to complete the mural because it is a unique piece of art that money would not be able to replace. However, in practice, you probably wouldn’t want that artist painting the mural anymore.
Elements Required for Specific Performance:
- Valid Contract: There must be a valid and enforceable agreement between the parties. (Oral contracts can be more difficult to enforce through specific performance)
- Substantial Breach: The party seeking specific performance must show that the other party has substantially breached the contract, a small breach of contract may not warrant specific performance.
- Inadequacy of Damages: The party who was hurt must show that monetary damages would not be sufficient to fix the breach. This evidence would typically require that the subject matter of the contract is unique or irreplaceable.
- Feasibility: The court must believe that it is possible for the party who broke the contract to be able to transfer the property as initially intended and fulfill their obligations as promised.
What is an Adequate Remedy?
The adequacy of remedies is closely intertwined with the availability of specific performance. If money alone will make the other party in the contract whole, i.e. they can buy the same product again, then specific performance is unnecessary.
For example, if you had an agreement to buy a print of a Dali painting and the seller backs out, you can just buy another print. However, if you had an agreement to buy an original one-of-one Dali painting and the seller backs out, you can’t buy the exact same painting anywhere else. In these types of cases, money alone won’t make you whole. You want the unique Dali painting you contracted for and might sue for specific performance.
Specific Performance is an Equitable Remedy
If you have an adequate remedy at law, that is typically a reference to payment of money. Specific performance is an equitable remedy–where the court is evaluating equity (or fairness).
A request for specific performance is an appeal to the court’s equitable powers. Lackner v. Glosser, 2006 PA Super 14, 892 A.2d 21, 31 (Pa. Super. 2006). Specific performance will be granted only if the person seeking the equitable remedy is clearly entitled to such relief, there is no adequate remedy at law, and the trial court believes that justice requires it. “Inequity or hardship may be a valid defense in an action for specific performance and such decree refused if in the exercise of a sound discretion it is determined that, under the facts, specific performance would be contrary to equity or justice.” Payne v. Clark, 187 A.2d 769, 771 (Pa. 1963).
In summary, equitable remedies are sought when the circumstances of a breach of contract requires something other than money to achieve fairness and justice, such as specific performance or an injunction. Legal remedies involve payment of money to remedy a breach of contract. The choice between legal and equitable remedies depends on the nature of the case and the specific relief sought by the injured party.
We wrote about the difference between a legal remedy and an equitable remedy in a prior blog. Check it out for a more in-depth breakdown.
Contact Kaminsky Law for a free consultation about obtaining specific performance
Specific performance is a powerful legal remedy if a unique or one-of-one item is the subject of your dispute. It is important to keep in mind that specific performance cannot sought all situations. Whether you are seeking to enforce a real estate contract, obtain advice on drafting a contract or thinking about suing because a complex business contract has been breached, we assist many clients in the Philadelphia and Bucks County area with their contract needs.
Contact Kaminsky Law to help you navigate the contract process with confidence and ensure you are entering into agreements that are legally binding and beneficial.
You can also fill out a contact form on the side or bottom of the page, or call us for a free consultation at 215-876-0800.
