Specific performance, an equitable remedy, is typically granted
when monetary damages are inadequate to address a breach of
contract, particularly in cases involving unique or irreplaceable
assets like land. It compels a party to fulfill their contractual
obligations rather than just pay compensation. The circumstances
under which court grant equitable specific performance are:-
Breach of contract where damages are insufficient: The remedy is
designed for situations where monetary compensation would not
adequately compensate the injured party for the breach.
Contracts for the sale of land: Because land is considered unique,
damages are often deemed insufficient to compensate for a breach of
contract, making specific performance a common remedy in these
cases.
Contracts for unique goods: If the goods in question are rare, unique,
or unavailable, specific performance may be granted as damages would
not adequately address the breach.
Contracts for services: In certain situations, specific performance can
be ordered for contracts for particular services, including building
contracts, but this is subject to certain criteria.
When damages are difficult to quantify: If determining the exact
amount of damages is too complex, specific performance may be ordered.
The factors that in influence court’s discretion in making that
determination are:-
Adequacy of Damages: This is the most fundamental factor. Specific
performance is typically only granted when monetary damages would not
adequately compensate the injured party for the breach. This often arises
when the subject matter of the contract is unique or has a special value
that cannot be easily quantified or replaced in the market.
Nature of the Subject Matter: The uniqueness of the subject matter is
closely linked to the adequacy of damages. Contracts for the sale of land
are a classic example where specific performance is often granted because
each parcel of land is considered unique. Similarly, contracts involving rare
goods, artwork, or other one-of-a-kind items may warrant specific
performance.
Conduct of the Parties (Clean Hands Doctrine): A party seeking specific
performance must demonstrate that they have acted equitably and in good
faith throughout the transaction. The "clean hands" doctrine dictates that a
court of equity will not assist a party who has engaged in unconscionable,
fraudulent, or deceitful conduct related to the contract.
Hardship to the Defendant or Third Parties: The court will consider
whether granting specific performance would cause undue hardship to the
breaching party or innocent third parties. If the burden on the defendant or
others outweighs the benefit to the plaintiff, the court may refuse to order
specific performance.
Mutuality of Remedy: Traditionally, courts required that the remedy of
specific performance be available to both parties to the contract. While this
doctrine has been relaxed in some jurisdictions, the court may still consider
whether the plaintiff’s obligations under the contract are capable of being
specifically enforced or if the defendant would be left without an adequate
remedy if specific performance were granted.
The cases related with specific performance are:-
Fact of the case:
Contracts gave to O’Neill Construction P/L the right to conduct a quarrying.
Business on the property owned by Mr and Mrs Coulis. O’Neill was to pay
royalties to the Coulis’s as joint tenants. Contracts was executed between
O’Neil and Mr Coulis. Mr Coulis died leaving it uncertain whether O’Neil was
to pay royalties to his Estate, or to Mrs Coulis as survivor of the joint
tenancy.
The decision of the court:
Windeyer J: held that a third party had no rights of her own: I fail to see
how allowing a promisee to obtain an order for specific performance by a
promisor to pay monies or transfer property to a third person can give
the third person himself any right to enforce a contract to which he was
not a party. The promisee has a choice of Remedies. But unless he be a
trustee of his contractual rights, he can, if he chooses, abandon both. On
the hypothesis that Mrs Coulis was not a party to the contract, that the
contract was only with her husband, it seems to me that there is a
logical hiatus in saying that she could compel proceedings to enforce it.
All in all, the equitable of specific performance is discretion of the court.