What is specific performance?
Specific performance is a remedy for breach of contract which is most often used in transactions involving land and construction work. The court can issue an order compelling a party to comply with their contractual obligations – a good example being to complete building works on time. Courts will not usually grant specific performance as a remedy in relation to a contract for personal services (such as employment contracts) because such an order would restrict an individual’s freedom.
When a party seeks specific performance of a contractual obligation, it does not need to specify its reasons for exercising its contractual rights and specific performance may be granted in addition to (or instead of) damages.
When is specific performance available?
Specific performance is only available where damages alone are not an adequate remedy and where the person with the benefit of the contract cannot carry out the work personally or engage a like-for-like replacement. In the case of an obligation to build contained in a lease, it will be relevant to consider whether the landlord should be left to forfeit the lease to recover possession of the premises, and then to have the ability to carry out the building works. Generally, specific performance will not be ordered if the performance would require constant supervision by the court over a period of time or if the obligations in question are not clearly defined in the contract.
Can I apply for specific performance before a breach of contract?
Yes, it has long been established that you can apply for specific performance in advance of the deadline date for performance under a contract. However, in a recent case, the High Court went further and upheld a decision that the court could actually order specific performance in advance of the deadline date – with a view to ensuring the result will be achieved by that date, or as soon as reasonably possible.
What does this decision mean?
As the first authority that the court may, before the time for performance of a contractual obligation, order specific performance requiring the defendant to take steps to achieve the prescribed result, this decision will encourage businesses seeking to enforce compliance with contractual obligations before there has been an actual breach of contract.
In this case, the leaseholder of the site was obliged to build a car park, providing 280 car parking spaces for use by the claimants and the tenant of the site. However, the leaseholder had not started work and it became fairly obvious that there would not be sufficient time for the car park to be built by the required date.
What factors will the court consider?
Although the court has broad discretion to award specific performance as a remedy where it sees fit, it likely to consider the following:
- Are the respondent’s obligations defined clearly enough in the contract?
- Is performance possible in the timescale?
- Is the claimant prepared to perform their side of the contract?
- Would the respondent suffer hardship in performing the contract?
- Has the respondent suffered hardship since entering into the contract, and was that hardship caused by the claimant and/or contract?
- What are the likely benefits of the order vs. the costs of performance to the respondent?
- Will any third parties be affected?
- Does the contract lack adequate consideration?
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