Enforcing Specific Performance Clause in Contracts
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.
- 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.
- 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
- 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.
- Remedy of specific performance is awarded when there is no substitute or alternate for the subject matter of the contract.
- 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.
- 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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