�Section 21 – Contracts Not Specifically Enforceable
This section explains which contracts the court will not enforce through specific performance
(i.e., the court won't force the parties to perform the contract exactly as agreed — you can only
get money compensation).
�List of Contracts That Cannot Be Specifically Enforced:
(a) Where Money Is Enough
If you can get adequate compensation in money, there’s no need for specific performance.
�Example: A contract to supply 10 bags of sugar. If one party defaults, the other can just buy it
from market and claim the price difference in money.
(b) Too Detailed or Personal
If the contract:
Has too many tiny or complex details,
Depends on someone's personal skill, choice, or talent,
Or is of such a nature that courts cannot supervise or enforce it properly,
Then it won’t be specifically enforced.
�Example: A contract to paint a portrait — courts can’t supervise an artist’s personal style.
(c) Terms Not Clear Enough
If the contract terms are not certain, and the court cannot figure out exactly what was agreed,
then it won’t be enforced.
�Example: "I will sell you some of my land for a fair price someday." — Too vague.
(d) Revocable Contracts
If a contract is by nature revocable (can be canceled at any time), courts won’t force its
performance.
�Example: License to use land which can be revoked by owner anytime.
(e) Trustees Exceeding Power or Violating Trust
If a trustee makes a contract:
Beyond their legal power, or
In breach of trust,
then that contract can’t be specifically enforced.
�Example: A trustee selling trust property without court permission.
(f) Contracts Beyond Company’s Legal Power
If a company or its promoters make a contract that is outside the scope of its objectives, it’s not
enforceable.
�Example: A railway company contracts to run a bakery — not its purpose.
(g) Continuous Duty for More Than 3 Years
If the contract involves a continuous duty (like a service or supervision) for more than 3 years,
it cannot be specifically enforced.
�Example: A contract to manage someone’s shop for 5 years.
(h) Subject-Matter No Longer Exists
If both parties believed the subject-matter existed, but it actually did not exist at the time of
agreement, the contract is void and unenforceable.
�Example: A contract to buy a ship that had already sunk.
➤ Arbitration Agreements:
Agreements to refer disputes to arbitration are not specifically enforceable.
But if someone agrees to arbitrate, and then sues instead, the other party can use the
arbitration agreement to block the suit.
�Section 26 – Non-Enforcement Except with Variation
�What it means:
Sometimes, a person (plaintiff) goes to court asking for specific performance of a written
contract.
But the other party (defendant) claims that the written contract is not correct and needs to be
changed (varied) because of certain reasons.
� In such cases, the court will not enforce the original contract as it is.
It will only enforce it with the variation (change) claimed by the defendant, but only in these
5 specific situations:
�Cases Where Variation Is Allowed:
(a) Fraud or Mistake in Terms
If the written contract is different from what the defendant thought it was due to fraud or
mistake of fact,
�The court will only enforce the corrected version.
�Example: The defendant thought he was selling 2 plots, but the written contract says 4 plots
because of a mistake. The court will enforce the sale of only 2 plots.
(b) Misunderstanding About Effect
If the defendant didn’t understand the true effect of the contract because of fraud, mistake of
fact, or surprise,
�He won’t be forced to perform the exact contract unless the variation is made.
�Example: A person signs a contract thinking it’s just a loan, but it’s actually a mortgage deed
due to confusion.
(c) Misrepresentation or Broken Promise by Plaintiff
If the defendant:
Fully understood the contract,
But agreed based on a false statement or unfulfilled extra promise by the plaintiff,
�Then the court won’t enforce the contract unless it includes the promised term.
�Example: A seller agrees to sell a shop because the buyer promised to lease it back to him —
but now refuses. The court won’t enforce the contract unless that promise is included.
(d) Legal Result Not Achieved
If the goal of the contract was to achieve a specific legal outcome,
but the written contract doesn’t actually create that outcome,
�The court will vary the contract to produce the intended legal result.
�Example: A partnership contract is written in a way that doesn’t legally create a partnership,
though that was the real intent.
(e) Later Agreement to Change
If both parties agreed after signing to change or modify the contract,
�Then it will be enforced with that variation.
�Example: The parties later agreed to reduce the price or extend the timeline — the court will
enforce the new version.
�Section 27 – Who Can Be Forced to Perform a Contract
Even if the original party to the contract is not directly available, specific performance can
still be enforced against other people connected to the contract, under certain conditions.
�People Against Whom the Court Can Enforce Specific Performance:
(a) Either Party to the Contract
The court can order any party who signed the contract to perform it.
�Example: A agrees to sell land to B. B can sue A for specific performance.
(b) Any Later Owner (Except Innocent Buyer Without Notice)
If someone purchases the subject matter (like land) after the contract was made, then:
The original buyer (plaintiff) can still enforce the contract against this new owner,
Unless the new owner bought it in good faith, paid full price, and had no knowledge of
the original contract.
�Example: A sells land to B. Later, A also sells it to C. If C knew about the deal with B, B can
sue C and get the land.
(c) Person with Prior Title (That Defendant Could’ve Displaced)
If someone had an earlier right to the property, but the defendant could have removed that
right,
�then the plaintiff can still enforce the contract even if they knew about the prior title.
�Example: The land is mortgaged. A promises to sell it to B and was supposed to pay off the
mortgage but didn’t. B can sue A even though B knew about the mortgage.
(d) New Company Formed After Amalgamation
If a public company enters a contract, and then merges with another company,
�the new/amalgamated company must perform the contract.
�Example: Company A signs a contract to deliver machines. It merges with Company B to
become Company C. Company C must now fulfill the contract.
(e) Company Formed After Promoters Signed the Contract (Pre-Incorporation)
If promoters (founders of a company) signed a contract before incorporation,
�the company can be forced to perform that contract only if:
The company ratifies (approves) the contract after formation, and
The contract is within its objectives (not ultra vires).
�Example: Promoters of ABC Ltd. agree to buy land before registration. If ABC Ltd., after
incorporation, accepts the deal formally, it can be made to perform the contract.
�Section 28 – What Parties Cannot Be Compelled to
Perform
This section protects a person from being forced by the court to carry out a contract when
their consent was not freely or fairly given, or when the deal was unfair.
�Specific performance CANNOT be forced in the following cases:
�(a) Grossly Inadequate Consideration (Unfair Price = Fraud or Advantage)
If the party was supposed to receive something (money/property/etc.) that is extremely low in
value compared to the real worth of what they were giving,
�then it shows signs of fraud or that the other party took undue advantage.
�Example:
A agrees to sell his land worth Rs. 10 million to B for just Rs. 1 million because he was misled
or unaware of its true value.
�A cannot be forced to perform the contract, as it is unfair and suspicious.
�(b) Consent Was Obtained by Misrepresentation or Unfair Means
If the party’s agreement was obtained through:
Misrepresentation (whether intentional or innocent),
Concealment of facts,
Deceit, trickery, or pressure,
�Then that person cannot be forced to perform the contract.
Also applies if:
The other party made a promise and did not fulfill it (substantially),
�Then specific performance will not be granted.
�Example:
B convinces A to sign a contract to sell his factory by falsely claiming that the factory land is
being acquired by the government.
�A’s consent was based on a false statement, so A cannot be compelled to go ahead with the
deal.
�(c) Mistake, Misunderstanding, or Surprise
If the person agreed under a mistake, misunderstood the contract, or was taken by surprise,
�Then he/she cannot be forced to perform the contract.
�BUT — if the contract has a clause allowing compensation for mistakes,
�then the mistake may be adjusted with compensation, and the rest of the contract can still
be enforced.
�Example:
A agrees to sell 100 bags of rice, thinking the price is Rs. 500 per bag, but the written contract
says Rs. 300 per bag.
� If the mistake is serious and was not noticed, A cannot be forced to sell at Rs. 300 unless
compensation is paid.