Specific Performance in Contract Law: When Courts Order Perf...

Introduction

Specific performance is a court-ordered remedy in contract disputes that requires the breaching party to do exactly what they promised. Instead of money damages, the court orders performance when cash won’t truly make the non-breaching party whole. In the US, this remedy is most common with unique property (like real estate) and certain goods (like rare art or custom-made items). It is an equitable remedy, which means it’s discretionary and guided by fairness, practicality, and the specifics of the deal.

Courts rarely order specific performance for personal services because forcing someone to work raises serious constitutional and public policy concerns. For goods, Article 2 of the Uniform Commercial Code (UCC) allows specific performance in limited situations, especially for unique goods or when a buyer can’t obtain a suitable substitute.

What You'll Learn

• What specific performance is and how it differs from money damages
• When courts are likely to order performance and when they are not
• Why real estate contracts often qualify for specific performance
• How UCC § 2-716 applies to unique goods and “other proper circumstances”
• Key factors: uniqueness, certainty of terms, feasibility, and fairness
• Defenses and limits, including hardship, unclean hands, and laches
• Case takeaways from Shubert v. Butte County Memorial Hospital and Van Wagner Advertising Corp. v. S&M Enterprises
• Practical steps for pleading, proving, and defending specific performance
• Contract drafting tips to address remedies, including specific performance clauses

Core Concepts

When Courts Grant Specific Performance

Courts tend to order performance only when these conditions are met:

• A valid, definite contract: The agreement must have clear, essential terms (parties, subject matter, price or method, and timing). If the Statute of Frauds applies (e.g., real estate or certain goods), there must be a signed writing or an applicable exception.
• Inadequacy of money damages: Money won’t put the non-breaching party in the position they bargained for. This is common with unique assets that can’t be easily valued or replaced.
• Uniqueness or special value: Real estate is generally treated as unique. Goods can be unique by nature (rare art) or because substitutes aren’t available.
• Readiness and ability to perform: The plaintiff must show they have performed or can perform their side of the deal (for example, tendering purchase funds).
• Feasibility of enforcement: The court must be able to supervise or enforce the order without unreasonable burden.
• Fairness of the deal and conduct: The remedy is discretionary, so unfair bargaining or misconduct by the plaintiff (unclean hands) can defeat the request.

When Courts Deny Specific Performance

Even with a valid contract, courts can refuse specific performance if:

• Damages are adequate: If the harmed party can be fairly compensated with money, the court will usually award damages instead.
• Personal services are involved: Courts do not force personal labor or creative performance. Sometimes, a court may grant a negative injunction (e.g., enforcing a non-compete) rather than ordering someone to perform.
• Terms are too vague: If the contract lacks definite, enforceable terms, performance cannot be ordered.
• Enforcement would be impractical: Continuous court supervision or complex technical steps can weigh against the remedy.
• Undue hardship or impossibility: If performance would be extremely burdensome or impossible due to later events, courts may deny the remedy.
• Equitable defenses apply: Laches (unreasonable delay), unclean hands, mistake, fraud, unconscionability, or interference with rights of an innocent third party may block relief.

Real Estate and Specific Performance

Real estate contracts are the classic setting for specific performance:

• Presumption of uniqueness: Because parcels differ in location, features, and surroundings, courts often view land as irreplaceable.
• Buyer or seller suits: Both buyers and sellers may sue for specific performance, though buyers do so more often.
• Marketable title and tender: A seller seeking performance must be able to convey marketable title. A buyer must show they were ready, willing, and able to close (including proof of financing).
• Time is of the essence: If the contract says so, missing deadlines can bar specific performance. Courts look closely at notice and any waiver of strict timing.
• Abatement for defects: If there’s a minor title or acreage issue, some courts allow “specific performance with abatement” (performance with a price adjustment).

Goods and UCC § 2-716

Specific performance for goods is narrower but available:

• Unique goods: Rare items, custom-made products, or outputs that cannot be readily obtained support specific performance.
• Other proper circumstances: Courts may order performance when a buyer cannot “cover” (obtain a reasonable substitute) or when the market is tight.
• Replevin: Under UCC § 2-716(3), buyers can seek replevin to recover identified goods if cover is unavailable.
• Proof matters: Show the lack of substitutes, failed efforts to cover, and why price damages would not be a fair fix.

Key Examples or Case Studies

• Example 1: Real Estate Transaction
  A buyer contracts to purchase a unique parcel. The seller backs out. The buyer sues for specific performance to force the transfer. Because land is unique and money may not secure a comparable property, a court is more likely to order performance.

• Example 2: Sale of Rare Goods
  An art collector agrees to sell a one-of-a-kind painting, then refuses. The buyer files for specific performance. Given the painting’s uniqueness and the lack of substitutes, courts often find damages inadequate and may compel delivery.

• Shubert v. Butte County Memorial Hospital
  The plaintiff sought delivery of medical equipment as promised. The court granted specific performance, finding the equipment essential and not readily replaceable, so money would not fix the harm.

• Van Wagner Advertising Corp. v. S&M Enterprises (N.Y. 1986)
  This case involved a lease for a particular advertising sign location. The court denied specific performance, concluding that while the space was distinctive, its economic value could be calculated and money damages would adequately compensate the lessee.

These examples show the line courts draw: unique, irreplaceable subjects favor performance; situations where value can be fairly measured point to damages.

Practical Applications

• Pleading the claim

  • Plead a valid, definite contract and attach it if possible.
  • Allege why damages are inadequate (uniqueness, failed cover, special features).
  • Plead readiness and ability to perform (financing, tenders, escrow deposit).
  • Request alternative relief (specific performance or, if denied, damages).

• Evidence to collect

  • For real estate: appraisals, evidence of unique attributes, proof of market conditions, title reports, financing commitments, proof of tender.
  • For goods: product specifications, uniqueness or customization details, proof of failed attempts to cover, market scarcity.
  • Communications showing clear agreement and the other side’s refusal to perform.

• Litigation moves

  • Real estate: record a lis pendens to alert third parties of the claim.
  • Seek temporary relief to preserve the status quo (e.g., restrain transfer to others).
  • For goods: consider replevin for identified goods under UCC § 2-716(3).

• Defense strategies

  • Argue adequacy of damages and present a reliable method to value the loss.
  • Raise indefiniteness, Statute of Frauds (and lack of exceptions), impossibility, or undue hardship.
  • Assert equitable defenses such as laches, unclean hands, or unconscionability.
  • Show that performance would require excessive court supervision, or that third-party rights would be harmed.

• Drafting tips

  • Include a specific performance clause stating the parties agree that money damages may be inadequate and that equitable relief is appropriate. While not binding on the court, it can be persuasive.
  • Clarify whether liquidated damages are the exclusive remedy or available alongside specific performance.
  • Address timing explicitly (including “time is of the essence” if intended) and define critical deliverables to avoid “too vague” challenges.
  • Consider attorney’s fees provisions for enforcement actions.

• Settlement angles

  • Explore specific performance with abatement (price reduction) for minor defects.
  • Consider substitute performance plus a price adjustment when exact performance is no longer possible.
  • Use escrow holdbacks to resolve punch-list items without derailing closing.

• Related terms to review

  • Severable Contract
  • Lessor and Lessee
  • Promissory Estoppel
  • Material Term
  • Benefit of the Bargain Damages

Summary Checklist

• Confirm a valid, definite, and enforceable contract
• Show money damages won’t make the claimant whole
• Prove uniqueness or the absence of reasonable substitutes
• Demonstrate readiness and ability to perform (tender, financing)
• Establish that enforcement is feasible and fair
• Prepare to counter defenses: laches, unclean hands, unconscionability, mistake
• For real estate: address marketable title, timing, and record a lis pendens
• For goods: rely on UCC § 2-716; document failed cover and market scarcity
• Draft or review remedy language: specific performance clause, exclusivity of liquidated damages, attorney’s fees
• Always plead alternative relief in case the court denies specific performance

Quick Reference