Outline: Contracts - IX - Specific Performance (Equitable Remedy)

Contracts (Spring 2006, Hull)

IX. SPECIFIC PERFORMANCE (EQUITABLE REMEDY)

1. Prerequisites for Specific Performance
   1. Inadequate legal remedy
      1. Unique property (land presumed unique)
      2. Inability to pay damages
   2. Administratively feasible
   3. Certain terms
2. Inadequacy of Legal Remedy
   1. Severson v. Elberon Elevator, Inc. – Specific performance available when contract involves property which is unique or possesses special value, such as real estate.
   2. R.2d 360 – Factors Affecting Adequacy of Damages
      1. difficulty of proving damages with reasonable certainty,
      2. difficulty of procuring suitable substitute performance by means of monetary award, and
      3. the likelihood that award of damages could not be collected
   3. R.2d 361 – Effect of Provision for Liquidated Damages – Specific performance or injunction may be granted to enforce duty even if there is a provision for liquidated damages for breach of that duty
   4. R.2d 363 – Effect of Insecurity as to the Agreed Exchange – Specific performance or injunction may be refused if substantial part of agreed exchange for performance to be compelled is unperformed and performance not secured to court’s satisfaction
   5. UCC 2-719(1)(b) – Contractual Modification or Limitation of Remedy – Resort to remedy as provided is optional unless remedy expressly agreed to is exclusive, in which case it is sole remedy
3. Problems with Specific Performance
   1. Judicial burden
   2. Deters efficient breaches (sometimes, society benefits from certain kinds of breaches, because it incentivizes better allocation of resources, and everybody basically wins; compensation still available to injured party)
   3. Distate for compulsion
4. Construction and Employment Contracts
   1. R.2d 365 – Effect of Public Policy – No specific performance that would entail compulsion contrary to public policy [Petry v. Tanglwood Lakes, Inc. – Court will not compel specific performance of developer’s promise to homeowner to build lake because it counters developer's promise to HOA not to build lake, especially where developer financially unable to build lake]
   2. R.2d 362 – Effect of Uncertainty of Terms – No specific performance unless the terms of contract are sufficiently certain [Goldblatt Bros., Inc. v. Addison Green Meadows, Inc. – Developer’s failure to pave access road justifies specific performance; but failure to provided explicitly stated number of parking spaces is not, if a sufficient number has been provided]
   3. R.2d 367 – Contracts for Personal Service or Supervision [Nassau Sports v. Peters – Hockey player who signed on to competing league in violation of contract not compelled to play for original league, but enjoined from playing for new league]
      1. promise to render personal service will not be specifically enforced
      2. promise to work exclusively for one employers will not be enforced by injunction against serving another if result will compel performance involving personal relations that are undesirable if continued, or to leave the employee without other reasonable means of making a living
5. Equitable Defenses
   1. Balance of hardships [Goldblatt]
   2. Unfair price
   3. "Unclean hands" - Party seeking equity must be acting equitably
   4. "Laches" - Unreasonable delay in asserting rights against other party