Introduction:
The courts of the United States normally grant only monetary damages to a claimant in litigation. Indeed, there is overwhelming authority that the courts are only to grant monetary damages except in unique and specified circumstances.
There are times, however, when the courts will grant orders requiring a party to perform some act or transfer some asset rather than grant monetary damages and those times are usually related to circumstances in which monetary relief would not afford the plaintiff an adequate remedy.
The classic examples are sales of real property since each parcel is considered unique and performance of a concert by an artist of unique talent.
In certain circumstances, 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. Thus, a singer X can be compelled to attend a concert and perform, or the seller of real estate can be compelled to transfer title.
This is called specific performance and this article discusses the basic law that applies.
The Basic Law:
Specific performance is a disfavored remedy utilized by courts when no other remedy (such as monetary damages) will adequately compensate the party seeking relief. If a monetary (commonly called “legal remedy”) will not put the injured party in the position he or she would have enjoyed had the contract been fully performed, then the court will use an order requiring action by the defendant, instead (commonly called “equitable remedy.”) 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 damages is unclear. When a contract is for the sale of a unique property, for instance, mere money damages may not remedy the purchaser's situation.
Requirements for Specific Performance:
Courts will enforce specific performance only if the underlying contract was “fair and equitable.” It is up to the plaintiff to demonstrate that the contract was an appropriate one, legal, with each party receiving fair consideration for performance.
Since monetary damages are awarded whenever possible, it is also vital for the plaintiff to demonstrate that the unique nature of the asset at issue requires specific performance and that monetary damages would not suffice. Commodities that courts have found to support specific performance include works of art, custom-made products, and goods in extremely short supply.
Most states have adopted the Uniform Commercial Code (UCC), which addresses specific performance criteria, including California.
California law states that specific performance may be compelled if:
- Specific performance would otherwise be an appropriate remedy; and
- The agreed performance by the plaintiff 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.
Note that an order for specific performance is largely left up to the discretion of the courts. Even in those situations in which specific performance may be allowed, the court has discretion not to grant it. For example, if a plaintiff is purchasing a two-bedroom condo in a large project, the defendant breaches, but other identical condos are available, the court may conclude that monetary damages are sufficient, even though real property is at issue.
Specific performance is an alternative equitable remedy to a cause of action for breach of contract. Hence, the statement of a cause of action in a suit for specific performance calls for two kinds of allegations: those that establish the right to recover for breach of contract, as well as those that are essential to the granting of the equitable remedy of specific performance.
The equitable remedy sought in an action for specific performance is a court order requiring the defendant to perform the action he or she promised to perform. For example - where a contract is for purchase of real estate, an action for specific performance asks the court to order the defendant to sell the property to the plaintiff on the terms stated in the contract.
When specific performance is impossible, or the pleading or proof does not justify that remedy, the court may grant monetary damages in lieu of specific performance if the complaint sufficiently alleges the pecuniary loss suffered.
Thus, a complaint for specific performance should allege:
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- The making of a specifically enforceable type of contract, sufficiently certain in its terms and with legally competent parties;
- Adequate mutual consideration;
- Just and reasonable contract;
- Plaintiff's performance, tender, or excuse for nonperformance;
- Defendant's breach of the agreement
- Inadequacy of the remedy at law (monetary damages).
Inadequacy of monetary damages is a fundamental condition of any kind of equitable relief. Accordingly, the complaint must set forth facts to show that the breach cannot be adequately compensated for in damages. (Flood v. Templeton (1905) 148 C. 374, 378, 83 P. 148; Morrison v. Land (1915) 169 C. 580, 586, 147 P. 259; Sheppard v. Banner Food Products (1947) 78 C.A.2d 808, 813, 178 P.2d 455; 11 Summary (9th), Equity, §21; infra, §§760, 761.)
Illustrative Examples:
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. (See Emirzian v. Asato (1913) 23 C.A. 251, 256, 137 P. 1072)
Contract to Purchase Real Property: In the case of a contract for the transfer of land, or an interest in land, whether by sale or lease, it is presumed that damages would not adequately compensate. The plaintiff need not establish inadequacy of the legal remedy in the particular case; historically, land is treated as unique, and specific performance will therefore be granted as a matter of course unless some other equitable reason for denial is shown. In the case of a single-family dwelling that the party seeking performance intends to occupy, this presumption is conclusive. In all other cases, this presumption is one affecting the burden of proof. (C.C. 3387; see Remmers v. Ciciliot (1943) 59 C.A.2d 113, 119, 138 P.2d 306; Fleishman v. Woods (1901) 135 C. 256, 261, 67 P. 276; Pike v. Hayden (1950) 97 C.A.2d 606, 612, 218 P.2d 578 [agreement to lease service station and cafe]; Ellison v. Ventura Port Dist. (1978) 80 C.A.3d 574, 579, 145 C.R. 665, citing the text; Abadjian v. Superior Court (1985) 168 C.A.3d 363, 374, 214 C.R. 234
Entertainment by Unique Performer:
The seminal case was Lumley v. Wagner, decided 101 years ago. This case involved an opera singer but is now used routinely in theatre and movie contracts. The following is a typical recital of provisions found in many motion picture contracts today:
During the term hereof the artist will not render his services as an actor, nor will he pose, act, appear, write, direct or render any other services in any way connected with motion pictures or photoplays, nor will he render any services of any kind or character whatsoever in any way connected with dramatic, theatrical, musical, vaudeville, radio, television or other productions, shows, performances and/or entertainment, nor will he render any other similar services to or for himself or to or for any other person, firm or corporation other than the producer without the prior written consent of the producer. The artist further agrees that he will not consent to nor permit any other person to advertise, announce or make known, directly or indirectly, by paid advertisements, press notices, or otherwise, that he has contracted to do or perform any act or services contrary to the terms of this agreement. The producer shall have the right to institute any legal proceedings in the name of the artist or otherwise to prevent such acts or any of them. It is distinctly understood and agreed that the services to be rendered by the artist hereunder and the rights and privileges herein granted to the producer by the artist are of a special, unique, unusual, extraordinary and intellectual character which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law and that a breach by the artist of any of the provisions contained herein will cause the producer irreparable injury and damage. The artist expressly agrees that the producer shall be entitled to injunctive or other equitable relief to prevent a breach of this agreement by the artist.
As can be seen, the wording specifically refers to those criteria which would normally grant specific performance, in this case an injunction. Note the court would still have discretion to determine if such relief was justified.
Conclusion:
Courts are loathe to grant orders since monetary damages are a far easier means to afford compensation. If a court grants an order, it often must enforce it with additional orders should the party fail to perform, and such involvement can be complex and long lasting. Alternatively, awarding monetary damages finishes the court’s involvement since the party can seek to enforce that judgment via writs of execution that do not require constant court participation.
The party seeking such equitable relief must be prepared to overcome the reluctance of most courts to go beyond monetary damages. It is certainly possible and in the case of real property transactions, almost routine, but proper preparation of pleadings is essential.