When a commercial real estate transaction goes south, purchasers often ask their lawyers if they can advance a claim for specific performance of the contract. Specific performance will be granted where the contract involves a unique chattel; the court determines whether a chattel is unique. Copyright © 2020, Thomson Reuters. Most importantly, this means that the buyer must show that he or she had appropriate financing, whether in the form of cash or from a lending institution. To explore … In a real estate contract, parties may agree to a contract, such as for the sale of a home. Example: Rina offers to buy Beth's house and Beth accepts, but later decides to keep the property. The term specific performance refers to literal performance of ones obligations under a contract. Typically, specific performance will be awarded when damages are not an adequate remedy, as in cases where the subject matter of the contract is unique or where damages cannot be measured with reasonable certainty. However, sometimes a monetary remedy doesn't quite make the plaintiff whole, which is the goal of any civil remedy. Depending on the circumstances, real estate, artworks, and sentimental mementos can all be unique, so you can seek specific performance for those things. In which of the following situations will a court grant specific performance? This is because courts have determined that property is unique, and specific performance is often … In other words, a court may order specific performance in the form of replevin (transfer of actual goods) as a remedy in a contractual dispute when cash damages are not sufficient. Specific performance is a specialized remedy used by courts when no other remedy (such as money) will adequately compensate the other party. Although the theory can be applied to many situations, it is most often seen in real estate transactions. (Cal. )In contracts for personal services. When a contract is for the sale of a unique property, for instance, mere money damages may not remedy the purchaser's situation. Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. The action is usually one that has been previously detailed in a contract. The subject matter of the contract must be unique, or an action for damages would be the proper remedy. The agreed counterperformance has been substantially performed or its concurrent or future performance is assured or, if the court deems necessary, can be secured to the satisfaction of the court. This is called specific performance. . Specific Performance presumed unique;6 and, more recently, long-term requirements con- tracts, for which damages from breach are hard to calculate.7 A disappointed promisee who is able to show that he has no adequate remedy at law nevertheless is not assured of obtaining specific perfor- mance. Most commonly ordered in cases involving real property and rare chattels. An alternative to the much more common award of monetary damages, specific performance is an injunction on a contract dispute often involving sensitive material or … Nearly all states have adopted the Uniform Commercial Code (UCC), which addresses specific performance. Thus, specific performance orders are usually for unique items such as real estate, antiques, heirlooms and artworks. Primary tabs. (3) The buyerhas a right of replevin for goodsidentified to the contractif after reasonable effort he is unable to effect cover for … Mutuality of Obligation. Specific performance is an alternative to a courts decision to award damages and it is commonly used as injunctive relief in cases involving real property or the disclosure of confidential information. If one of the parties does ... A Valid and Binding Contract. Explanation: Specific perfomance constitutes an equitable remedy that is granted in circumstances that the contract's subject matter is unique, and that damages are not reasonably an adequate remedy. The reason is simple. When Specific Performance May Be Ordered in a Real Estate Transaction. The latter remedy is specific performance. Specific performance is an equitable remedy where the court orders the breaching party to actually perform on the contract. This Court reviews equity actions de novo. The most common reason courts grant specific performance is that the subject of the contract is unique, when it's not merely a matter of money or where the true amount of damages is unclear. Contact a qualified business attorney to help you negotiate and craft airtight contracts. For instance, the UCC states that a buyer "has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing...". Specific performance may be ordered where the subject matter of the contract has unique qualities (such as land, paintings, shares in a private company) and the defendant is shown to have acted in breach of his obligations under the contract. § 2-717. The second requirement is meant to ensure that the other party (the plaintiff) also has performed or will perform its obligations as specified by the contract. a. Please try again. As a general rule, specific performance is applied in breach of contract actions where monetary damages are inadequate, primarily where the contract involves land or a unique chattel (Personal Property). It is similar to specific performance and often used interchangeably in statutes. )In a case involving breach of contract for the sale of real property. Damages Inadequate. A rare stamp collection is a unique chattel for purposes of specific performance, whereas stock listed on the New York or American Stock Exchange is not unique. The most common reason courts grant specific performance is that the subject of the contract is unique, when it's not merely a matter of money or where the true amount of damages is unclear. Deduction of Damages From the Price. Specific performance is not a remedy available in every lawsuit. These remedies include filing a lawsuit to collect damages or seeking a court order requiring the infringing party to live up to their obligations. Specific performance will be granted where the contract involves a unique chattel; the court determines whether a chattel is unique. Specific performance A contractual remedy in which the court orders a party to actually perform its promise as closely as possible, because monetary damages are somehow inadequate to fix the harm. Buyer's Right to Specific Performance or Replevin. . Specific Performance for real property is now only granted when 1) the subject property is unique and a substitute is not readily available, 2) the remedy for damages is comparatively inadequate to do justice; and 3) the plaintiff has established a fair, real and substantial justification for the claim of specific performance [2]. (1) Specific performance may be decreed where the goodsare unique or in other proper circumstances. This particularly is the case with undeveloped properties. We recommend using Should a party default on his obligation, a court may issue an order for specific performance, requiring a party to perform a particular action. d.)Both (a) and (c). Courts can order defendants in contract disputes to actually perform the contractual duties as originally agreed if it is determined that money alone cannot resolve the issue. (1) Specific performance may be decreed where the goodsare unique or in other proper circumstances. Stay up-to-date with how the law affects your life, Name Beth would be compelled to go through with the sale. Beware real property owners: The mere filing of a suit for specific performance (regardless of its ultimate success or the merits) can potentially tie up your property for several years, with or without the existence of a lis pendens. Real estate is considered to be unique. Specific performance is the legal concept that anyone who signs a contract is bound to the terms of the contract. (3) The buyer has a right of replevin for goods identified to the contractif after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. b. However, a court won’t grant specific performance of an employment contract, even if the employee is “unique,” since forcing someone to work is too much like slavery. Specific performance is a legal demand that a party perform some act. To obtain specific performance, the buyer must show that he or she was ready and able to perform at the closing. Thus, specific performance is the presumed remedy for the breach of an agreement to transfer real property. Specific performance is almost never available for contracts of personal service, although performance may also be ensured through the threat of proceedings for contempt of court. Protect the integrity and future success of your business by contacting a local small business attorney today. Search, California law states that specific performance may be compelled. Code, § 3387.) A specific performance example is when a party defaults on its contractual obligation and is ordered by the court to fulfill said obligations. c.)Where goods are unique or rare. This means the presumption is final—the party seeking specific performance does not have to prove the real property was unique and the party opposing specific performance cannot argue the real property was not unique. Are you a legal professional? Specific performance is available when the contract involves property which is unique or possesses special value; real estate is assumed to possess that necessary quality. Courts will enforce specific performance only if the underlying contract was fair and equitable. As discussed above, it is usually reserved for cases in which the subject matter of the lawsuit is somehow rare or unique… Specific performance is only ordered when money damages are an insufficient remedy for the party’s failure to perform a contract. A rare stamp collection is a unique chattel for purposes of specific performance, whereas stock listed on the New York or American Stock Exchange is not unique. Begin typing to search, use arrow keys to navigate, use enter to select, Please enter a legal issue and/or a location. There are a few different legal remedies a party may consider when another party has allegedly breached its contractual obligation, including lawsuits and arbitration. Civ. It encompasses the idea that all parties to a contract are bound by the exact terms stated in that contract and that there are remedies that a wronged party can pursue when someone is in breach of those terms. -2- realty is unique; thus, there is no adequate remedy at law. True . (2)The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just. Vergote v Kmart Corp (After Remand), 158 Mich App 96, 103; 404 NW2d 711 (1987). (2)The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just. The email address cannot be subscribed. When Home Sellers Can Use Remedy of Specific Performance In fact, even with real estate, not all properties and all situations are so unique that specific performance is necessary. Buyer's Incidental and Consequential Damages. Since there is no other piece of property or house exactly like Beth's, Rina may be entitled to specific performance on the contract. ‹ § 2-715. For example, California law states that specific performance may be compelled if: Specific performance would otherwise be an appropriate remedy;  and. When a contract is for the sale of a unique property, for instance, mere money damages may not remedy the purchaser's situation. Specific performance traditionally would not be ordered if the court determined that an award of damages at law would adequately protect the interest of the injured party. But if you or your business has been named in a contract breach lawsuit, or you need to file such a suit, it's in your best interests to work with an attorney. Other commodities that courts have found to support specific performance include works of art, custom-made products, and goods in short supply. The best time to hire an attorney typically is before you are faced with a legal action, since lawyers are trained to help clients avoid such legal vulnerabilities. Microsoft Edge. Basics of Specific Performance. Learn more about FindLaw’s newsletters, including our terms of use and privacy policy. The most common reason courts grant specific performance is that the subject of the contract is unique and adequate just relief requires more than a transfer of money and/ or where the true amount of … Contract Concerning Personal Property: Specific performance of an agreement to transfer personal property depends on pleading and proof of the facts of inadequacy of remedy, e.g., the unique nature of the property or its lack of determinable market value. The term replevin -- commonly referred to as "claim and delivery" -- refers to a legal action in which actual property (not its monetary value) must be transferred to the plaintiff in a dispute. If a legal remedy will put the injured party in the position he or she would have enjoyed had the contract been fully performed, then the court will use that option instead. Inadequacy of remedies at law is presumed in an action for breach of a real estate purchase and sale agreement due to the perceived uniqueness of land. Talk to an Attorney About Your Breach of Contract Case. . This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. Specific performance will be granted where the contract involves a unique chattel; the court determines whether a chattel is unique. Specific performance can be granted only by a court in the exercise of its Equity powers, subsequent to a determination of whether a valid contract that can be enforced exists and an evaluation of the relief sought. As you can see, an order for specific performance is largely left up to the discretion of the courts. Specific performance is an action to compel a party who breached a contract to perform the contract as promised. Visit our professional site », Created by FindLaw's team of legal writers and editors Internet Explorer 11 is no longer supported. | Last updated January 16, 2018. It is typically available in the sale of land law, but otherwise is not generally available if damages are an appropriate alternative. Firefox, or § 2-716. Google Chrome, A rare stamp collection is a unique chattel for purposes of specific performance, whereas stock listed on the New York or American Stock Exchange is not unique. Actions for specific performance are usually allowed with regard to a contract involving the sale of particular real estate; and a contract for sale of a particular business. It is virtually impossible to obtain title insurance necessary to convey title while an action for specific performance is pending. What Is "Specific Performance" as a Legal Remedy? Moreover, in transactions dealing with a single-family dwelling, this presumption is conclusive. "Specific performance is an equitable remedy available when legal remedies (monetary damages) are inappropriate or inadequate. Specific per… ›. Site-specific workemerged in the late 1960’s as an art-form that made a unique use of site andsite features to influence the shape and form of the design: these sites wereusually highly different or unique from all others and so each sculpture,art-work or performance had its own unique characteristics. Damages for the breach of a contract for the sale of ordinary personal property are, in most c… The power to grant specific performance is within the sound discretion of the trial court. All rights reserved.