Specific Performance under Contract Law.

SPECIFIC PERFORMANCE UNDER CONTRACT LAW

Author: Robin Soni

 

“Specific Performance” an order of the court, which is an alternative of monetary compensation awarded in case of breach of contract by any party i.e when one party fails to fulfil terms of the contract, another party can ask the court to direct the party for performing his contractual obligations instead of awarding damages. This is called ‘Specific Performance’.

 

DEFINITION OF SPECIFIC PERFORMANCE UNDER LAW OF CONTRACT-

While specific performance is technically the performance of a contractual obligation, it is most commonly referred to in relation to a court order to fulfil such an obligation.

For this, Specific Relief Act 1963 deals with various remedies awarded to an aggrieved party, where the defendant fails to fulfil his contract obligations by breach of contract. SPECIFIC RELIEF ACT 1963 contains the remedies granted at the discretion of the court for the enforcement of individual civil rights, which was enacted on 1 April 1964 in India. The Law Commission in its 9th report considered the provisions of this enactment.
For an example, If I call an electrician at my residence for repairing my bedroom AC, and he repairs the same but gives rise to a new problem that its swing stops to work.

Now in compensation, he is ready to return 20% of the money to me, but I ask him for repairing of swing instead of money. This is a simple example of specific performance in daily life.

Specific performance is best understood by considering an example.
Let’s say that drama is an art dealer. He acquires a rare, ancient Egyptian statue that is thought to have belonged to Cleopatra. Manisha collects Egyptian art and makes a sizable offer to buy the piece. Rama agrees, and the two make a valid legal contract.

Rama then decides that he’d rather keep the piece for now. He breaches his contract with Manisha. Manisha sues drama for breach of contract. The court decides that the piece is truly priceless, and Manisha can’t acquire another comparable piece no matter how much money the court awards her.
Instead, the court decides that rama should comply with the terms of the contract, and sell the piece to Manisha for the price she already agreed to pay. This is specific performance.

SECTION 10 OF SPECIFIC RELIEF ACT 1963 DEALS WITH “FOLLOWING CONDITIONS WHERE SPECIFIC PERFORMANCE IS ENFORCEABLE”-

  1. Where There Exists no standard for ascertaining actual damage cause of non-performance of the contract.
  2. If the court will direct to award monetary compensation, it will not provide adequate relief to the aggrieved party.

In Carlill v Carbolic Smoke Ball Co[1], A medical firm named Carbolic co. advertised its new drug, smoke ball, claiming that it would pay 100 Euro to anyone who got sick with influenza after taking drugs in the prescribed manner, as instructed in the advertisement. Carlill purchased and used it thrice a day, as instructed but later she had an attack of influenza. She claimed for 100 Euro but Carbolic refused, the action was brought in court and court after hearing both sides gave a verdict in favour of Mrs. carlill and ordered for specific performance of a contract to carbolic co.

In the following cases, Monetary compensation would not afford adequate relief-

1.Where the Property is not an ordinary article of commerce,

  1. 2. Property is of special value or interest to the plaintiff,
  2. or consists of goods which are not easily obtainable in the market.

WHEN CAN A PART OF CONTRACT BE SPECIFIC PERFORMED (Section 12)

The general rule is that the court shall not direct the specific performance of a part of the contract. Except in the cases where a party to a contract shall be deemed to be unable to perform the whole of his part,  in such cases only a part of the contract is specific performed which are as follows-

  1. Where a party to a contract is unable to perform the whole of his part of it and admits of compensation in money, the court may direct the specific performance of so much of the contract as can be performed and award compensation in money for the deficiency.
  2. Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either forms a considerable part of the whole, though admitting of compensation in money; or does not admit of compensation in money he is not entitled to obtain a decree for specific performance; but the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform.
  3. When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed the court may direct specific performance of the former part

REMEDIES AVAILABLE UNDER SPECIFIC RELIEF ACT 1963-

  1. Recovering Possession of Property (Sec 5)
  2. Specific Performance of contract (Sec 9 to 25)
  3. Rectification of instrument (Sec 26)
  4. Rescission of contract (Sec 27 to 30)
  5. Cancellation of Instrument (Sec 31 to 33)
  6. Declaratory Decrees (Sec 34 to 35)
  7. Injunctions (Sec 36 to 42)

CASES WHERE SPECIFIC PERFORMANCE OF CONTRACT NOT ENFORCEABLE-

  1. Contract of Non Performance of which compensation in money is an adequate relief.[Sec. 14 (1) (A)]
  2. Contract Running into Minute details & Contract Dependent on personal qualification or violation[Sec. 14 (1) (B)]
  3. A contract which is determinable in Nature [Sec. 14 (1) (C)]
  4. A contract which is involving Performance of continuous duties Which court can not supervise.
  5. Agreement to refer to Arbitration[Sec. 14 (1) (D)]

 

 In Saradamani Kandappan vs S. Rajalakshmi & Ors [2]The plaintiff failed to establish her readiness and willingness to complete the sale in terms of the agreement and she was not entitled to the relief of specific performance.

The assumption was that grant of specific performance would not prejudice the vendor-defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months.

 

References-

[1]1893 1 qb 256

[2]2011 12 SSC 18

 

 

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