Specific performance is an equitable remedy. When the court orders specific performance, they are ordering one party to perform a contractual obligation. Specific performance is distinct from damages and from actions on debts as a remedy for breach of contract.

The advantage of an order for specific performance is that the innocent party gets exactly what it contracted for and there is no need to mitigate loss. Consequently, there is the potential for the innocent party to act quite unreasonably in refusing to accept compensation for the breach of contract. For this reason the courts limit the availability of specific performance as a remedy.

The test they will generally adopt is whether damages would be an adequate remedy. If so, then specific performance will not be granted.

Factors suggesting damages would be an inadequate remedy

Land

Contracts for the sale of an interest in land are usually specifically enforceable. The reason for this is that the law views land as a unique asset for which damages would not adequately compensate the buyer. However, the law goes further and allows for specific performance even for a seller of land. In some cases a seller may have good reasons for wanting to transfer the disadvantages, burdens and obligations attached to a specific plot of land, but nonetheless the rule applies even to readily saleable plots. Specific performance for land is a major exception to the court’s restrictive approach.

Moreover, under the maxim “equity regards as done that which ought to be done” (Walsh v Londesdale  (1882) 21 Ch D 9), specifically enforceable contracts for the sale of land at a future date are viewed as transferring the beneficial (or equitable) ownership from the date on which they are entered into. To an extent, this provides a remedy for dealings in land which do not comply with the relevant statutory formalities.

Contracts to provide security

These contracts provide a particular creditor with priority over other creditors in the event of the debtor’s insolvency. Prior to insolvency, the debtor has suffered no loss (and so cannot claim damages). On insolvency, damages would be of no use (as the debtor would have insufficient assets). Therefore, the court generally orders specific performance of these contracts.

Difficulty quantifying damages

Although the courts do regularly overcome hurdles in quantification when awarding damages, there are cases which suggest that there are circumstances in which they will order specific performance. For instance:-

  • Hart v Herwig (1872-73) LR 8 Ch App 860 – where the Claimant would have had great difficulty in proving the value of a ship in Hamburg; or
  • Wolverhampton Corp v Emmons [1901] 1 QB 515 – where the benefit to the local authority Claimant in the building of a housing development was social and not purely financial.

Damages not recoverable

In Beswick v Beswick [1968] AC 58 the defendant sought to stop paying his mother a pension, an agreement which he had reached with his late father in exchange for taking over the family business. The rules of privity of contract meant that he could not be sued by his mother and the rules concerning the measure of damages meant that his father’s estate had suffered no loss and could not recover damages. The court therefore ordered Specific Performance.

NB | This case was prior to the enactment of the Contract (Rights of Third Parties) Act 1999

Unique goods

The court has a specific power under Section 52 of the Sale of Goods Act 1979 to order specific performance in respect of goods. However, there is a presumption that it will only do so where the goods are unique and a substitute is not readily available. Examples of this include antiques, collectibles, works of art and mechanical parts.

Factors suggesting damages would be an adequate remedy

Availability of substitute goods

In contrast to unique goods, where a substitute is available, specific performance will not be ordered. Rather, damages, assessed on the basis of the difference between the price of the substitute and that of the contract (where money has not yet been paid under it), will be the appropriate remedy.

Debt action available

Where a fixed sum is due, the courts will not ordinarily order specific performance of the contract. The appropriate remedy in such cases would be a claim for the debt.

Other factors which suggest that the court will not order specific performance

Contracts involving personal service

The courts are very reluctant to order specific performance where the performance of the contract would closely attach and encumber itself on the defendant’s person. The courts are generally unwilling to direct how people should personally behave. Moreover, there is the impracticality of compelling people who have lost trust in each other to work together.

Contracts of employment

Historically, the courts have been reluctant to curtail an employee’s personal liberty or require an employer to employ someone where the personal relationship has broken down. This position is now confirmed in statute. Contracts of employment are an obvious example of contracts involving personal service.

Need for court supervision

Although the courts’ approach has lately relaxed somewhat, historically they have imposed a blanket ban on specific performance of continuing contracts on the basis that constant monitoring would be required to ensure that the contract was being performed.

Impossibility

Where a defendant cannot perform their obligations under the contract, or could only do so illegally, the court will not grant specific performance.

Unavailability of performance by claimant

If a claimant is seeking an order of specific performance against a defendant, they must satisfy the court that they are in a position to perform their own essential obligations under the contract.

Uncertainty of performance by claimant

The court will not order specific performance if the defendant cannot be told precisely how they are to comply with the contract. The reason for this is that they may be held in contempt of court if they do not comply. The court will also be concerned about how performance would be supervised.

Mistake

Even if there is a valid and otherwise specifically enforceable contract, the court may be deterred from ordering specific performance if the defendant can show that they made a mistake and/or such an order would cause it undue hardship.

Laches

If a claimant is aware of a breach of contract by the defendant, they must ask the court for an order of specific performance with due haste, rather than delay excessively and fall foul of the equitable doctrine of laches.

The conduct of the claimant

“He who seeks equity must do equity”, and the court will not grant a claimant specific performance if he has in some way behaved dishonestly or unconscionably.