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Specific Performance

Specific Performance (7)

Section 20 of the Specific Relief Act, 1963 states that where the contract is broken due to non-performance of promise by any party, the party who suffers by such breach shall have the option of substituted with performance through a third party or by his own agency, and, recover the expenses and other costs actually incurred, spent or suffered by him, from the party committing such breach. This is, of course, subject to what has been otherwise agreed upon by the parties in the contract.

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In a suit for specific performance of a contract, the plaintiff may also claim compensation for its breach in addition to such performance. If, in any such suit, the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly.

How is compensation in a case for specific performance determined?

In determining the amount to beawarded under this section, the court shall be guided by the principles specified in section 73 of the Indian Contract Act, 1872.

Can compensation be granted in a case for specific performance if it is not claimed?

No compensation shall be awarded in a case for specific performance unless the plaintiff has claimed it in his plaint. However, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.

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The remedies of specific performance and injunction are similar, but the key difference is that while an order for specific performance orders a party to do something, an injunction orders a party not to do something. In other words, specific performance is a positive remedy whereas, an injunction is a negative remedy.

Specific performance of a contract means enforcement of exact terms of a contract. Under it the plaintiff claims for the specific thing of which he is entitled as per the terms of contract. 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. Specific performance is commonly used in the form of injunctive relief concerning confidential information or real property.

Temporary injunction

Temporary injunctions are such as are to continue until a specific time, or until the further order of the court, and they maybe granted at any stage of a suit, and are regulated by the Code of Civil Procedure, 1908.

Permanent injunction

A permanent or perpetual injunction can only be granted by the decree made at the hearing and upon the merits of the suit; the defendant is thereby perpetually enjoined from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the plaintiff.

When can the Court grant perpetual or permanent injunction

A perpetual injunction may be granted to the plaintiff to prevent the breach of an obligation existing in his favour, whether expressly or by implication.

Further, when the defendant invades or threatens to invade the plaintiff’s right to, or enjoyment of, property, the court may grant a perpetual injunction in the following cases, namely:—

  • where the defendant is trustee of the property for the plaintiff;
  • where there exists no standard for ascertaining the actual damage caused, or likely to be caused, by the invasion;
  • where the invasion is such that compensation in money would not afford adequate relief;
  • where the injunction is necessary to prevent a multiplicity of judicial proceedings.

What is mandatory injunction and when is it granted?

When, to prevent the breach of an obligation, it is necessary to compel the performance of certain acts which the court is capable of enforcing, the court may in its discretion grant an injunction to prevent the breach complained of, and also to compel performance of the requisite acts.

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A suit for specific performance can be filed by any party, in a court of competent jurisdiction, who has suffered loss due to non-performance of contract on part of the other party to the contract.

A party to a contract who is aggrieved because the contract is breached by another party has the option to file a suit for specific performance compelling to perform his part of contract. Before an equity court will compel specific performance, however, the contract must be one which can be specifically performed.

Can a representative or agent file the suit for specific performance on behalf of a party?

The representative in interest or the principal, of any party to the contract can also file the suit for specific performance. However, where the learning, skill, solvency or any personal quality of such party is a material ingredient in the contract, or where the contract provides that his interest shall not be assigned, his representative in interest or his principal shall not be entitled to specific performance of the contract, unless such party has already performed his part of the contract, or the performance thereof by his representative in interest, or his principal, has been accepted by the other party.

Against whom can one claim specific relief of contract?

The general rule is that specific performance of a contract may be enforced against—

  • either party thereto;
  • any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;
  • any person claiming under a title which, though prior to the contract and known to the
  • plaintiff, might have been displaced by the defendant;
  • when a limited liability partnership has entered into a contract and subsequently becomes amalgamated with another limited liability partnership, the new limited liability partnership which arises out of the amalgamation.
  • when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;
  • when the promoters of a company have, before its incorporation, entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company:

Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract.

What defenses can be taken in a suit for specific performance?

A defendant in a suit for specific performance may raise the following defenses:-

  1. Incapacity of parties
  2. Uncertainty of contract
  3. Absence of concluded contract
  4. Fraud
  5. Misrepresentation
  6. Mistake
  7. Illegality or want of authority to enter into contract

These will be as per the general principles of contract law.

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Readiness and willingness for Specific Performance of a Contract

Section 16(c) of the Specific Relief Act, 1963

Section 16(c) of the Specific Relief Act, 1963 mandates that the plaintiff should plead and prove his readiness and willingness as a condition precedent for obtaining relief of grant of specific performance.

What is meant by readiness and willingness?

In a suit for specific performance the plaintiff must plead and prove that he was ready and willing to perform his part of the contract right from the date of the contract up to the date of the filing of the suit. It is a well-established legal principle that ‘readiness’ and ‘willingness’ are matters that have to be proved substantially and not left to mere ceremony and form.

What is an example of showing ‘readiness and willingness’?

In the case Sukhbir Singh v. Brij Pal Singh [(1997) 2 SCC 200 : AIR 1996 SC 2510] it was held that “Law is not in doubt and it is not a condition that the respondents should have ready cash with them. The fact that they attended the Sub-Registrar’s office to have the sale deed executed and waited for the petitioners to attend the office of the Sub-Registrar is a positive fact to prove that they had necessary funds to pass on consideration and had with them the needed money with them for payment at the time of registration. It is sufficient for the respondents to establish that they had the capacity to pay the sale consideration. It is not necessary that they should always carry the money with them from the date of the suit till the date of the decree.”

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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.

Section 10 of the Specific Relief Act provides for the cases in which specific performance of contract is enforceable. The clauses (a) and (b) of the said section carve out the categories of contracts which are specifically enforceable. They are as follows  :­

(a) When   there   exists   no   standard   for   ascertaining   the actual damage caused by the non­performance of the act agreed to be done; or

(b) When the act agreed to be done is such that compensation in money for its non­performance would not afford adequate relief.

Thus, specific performance   should   be   considered   in   cases   where   it   is   difficult   to ascertain loss in monetary terms. As a natural corollary, when non performance of the agreement can be adequately compensated in terms of money, the Court should not exercise its discretion of granting specific performance.

How to determine whether compensation in money for non­performance of contract would not afford adequate relief?

There are two presumptions under the Specific Relief Act which are necessary to be taken into consideration while appreciating whether compensation in money for non­performance of contract would afford adequate relief or not. The first presumption is in regard to the contract to transfer immovable property and it shall be presumed that, breach of such contract cannot be   adequately   compensated   in   terms   of   money.   The   second presumption is in regard to the contract to transfer movable property and it shall be presumed that, breach of such contract can be relieved by compensation in money, except in two cases viz. ­

  1. where the movable property is not an ordinary article of commerce or is of a special value or interest to the plaintiff or consists of goods which are not easily obtainable in the market.
  2. where the movable property is held by the defendant as agent or trustee of the plaintiff.

Contract which cannot be enforces for Specific Performance?

Section 14 of the Specific Reliefs Act deals with different types of contract which cannot be specifically enforceable. The following contracts cannot be specifically enforced, namely:—

(a) where a party to the contract has obtained substituted performance of contract in accordance with the provisions of Section 20 of the Specific Relief Act, 1963;

(b) a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise;

(c) a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms; and

(d) a contract which is in its nature determinable.

When can a court order specific performance of a contract?

The Supreme Court of India has held that under Section 19(a) and (b) of the Specific Relief Act, 1963, specific performance of a contract can be enforced against either party thereto and any person claiming under him by a title arising subsequent to the contract, except a transferee for value, who has paid his money in good faith and without notice of the original contract.

The courts grant the relief of specific performance in the following situations

  1. If the compensation to be awarded cannot be determined. Remedy of specific performance is awarded in cases where it is impossible to fix compensation. In this case, the court directs the defendant to perform his promise as agreement as agreed at the time of making the contract.
  2. Remedy of specific performance is awarded when there is no substitute or alternate for the subject matter of the contract.
  3. Remedy of specific performance is awarded in case of goods, the value of which cannot be easily ascertained, and the goods have a unique character. For example, buildings, land, or goods having special value for the plaintiff.
  4. Remedy of specific performance is awarded at the sole discretion of the court.

When will a court NOT order for specific performance of a contract?

There are certain circumstances when the remedy of specific performance cannot be awarded. For instance, when the specific performance is impossible, when the contract is too vague to be enforced, when the element of ad-idem-consensus is missing, the contract was made for no consideration, when the contract is void or unenforceable etc.

What is required of the Plaintiff to obtain a decree for specific performance?

In order to obtain a decree for specific performance, the plaintiff has to prove his readiness and willingness to perform his part of the contract and the readiness and willingness has to be shown throughout and has to be established by the plaintiff. This is a matter of fact.

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What is meant by specific performance of a contract?

Specific performance of a contract means enforcement of exact terms of a contract. Under it the plaintiff claims for the specific thing of which he is entitled as per the terms of contract. 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. Specific performance is commonly used in the form of injunctive relief concerning confidential information or real property.

Which statute deals with specific performance of a contract?

The Specific Relief Act, 1963, specifically Chapter II of the Act deals with specific performance of a contract. It also lays down the types of contracts which cannot be specifically enforced as well as persons for or against whom contracts may be specifically enforced.

What is the purpose of the Specific Relief Act?

The Specific Relief Act, 1963 is an Act of the Parliament of India which provides remedies for persons whose civil or contractual rights have been violated.

How do you claim specific performance?

Specific performance is a specialized remedy used by courts when no other remedy (such as money) will adequately compensate the other party. 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.

Can I invoke specific relief for criminal remedies?

Specific relief is to be granted only for enforcing individual civil rights and not for enforcing penal laws.

What contract can be specifically enforced?

No person can sue for specific performance if he cannot be sued for it, whether because he is minor or for any other reason. The contract to be specifically enforced must be mutual.

What is Doctrine of Mutuality?

The doctrine of mutuality means the contract must be mutually enforceable by each party against the other.

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