Specific Performance of Contracts: Exceptions and Defenses

Posted on May 3, 2024 in Law & Jurisprudence

Contract Can’t Be Forced

Specific performance refers to the actual fulfillment of a contract, where the plaintiff is entitled to receive the exact thing they contracted for. However, there are circumstances where a contract cannot be specifically enforced.

Definition of Specific Performance

According to Doemory, specific performance of a contract involves the contracting party precisely fulfilling their obligation by either doing or omitting the exact act they agreed to do or not do.

Relevant Provisions

Sections 20 and 21 of the Specific Relief Act outline the relevant provisions regarding specific performance.

General Rule

As a general rule, the plaintiff is entitled to the subject matter of the contract, and the court can specifically enforce such a contract.

Exceptions to the General Rule (Section 21 of the Specific Relief Act)

The following contracts cannot be specifically enforced:

I. Contracts Where Compensation is an Adequate Relief

Contracts where monetary compensation is sufficient to remedy non-performance.

II. Contracts Running into Minute or Numerous Details

Contracts involving excessive or intricate details that make enforcement impractical.

III. Contracts Dependent Upon Personal Qualification

Contracts reliant on personal skills or qualities that cannot be easily replaced.

IV. Contracts Dependent Upon Violation of the Parties

Contracts that involve or encourage breaches of agreement between the parties.

V. Uncertainty of Terms

Contracts with terms that the court cannot determine with reasonable certainty.

VI. Revocable Contracts

Contracts that are inherently revocable by nature.

VII. Contracts Made by Trustees in Excess of Their Power

Contracts made by trustees that exceed their authority or violate their trust.

VIII. Contracts by or Behalf of a Corporation or Public Company Created for Special Purposes

Contracts made by or for corporations or public companies established for specific purposes, or by their promoters, that exceed their powers.

IX. Contracts of Performance of a Continuous Duty Existing Over a Longer Period Than Three Years

Contracts requiring continuous duties extending beyond three years from the date of the agreement.

X. Non-Existence of Material Part of Subject Matter

Contracts where a significant portion of the subject matter, assumed by both parties to exist, has ceased to exist before the contract was made.

XI. Contract to Refer to Arbitration

Contracts that solely involve referring matters to arbitration cannot be specifically enforced.

Defenses of Defendant

Meaning

A defense refers to the defendant’s denial of the truth or validity of the plaintiff’s claim.

Defenses in Suit of Specific Performance

The following defenses are available to the defendant:

  1. Absence of Writing or Part Performance: The plaintiff has not fully performed their part of the contract, and the unperformed portion is substantial and cannot be compensated monetarily.
  2. Compensation in Money is Adequate Relief: The defendant argues that monetary compensation would sufficiently remedy the plaintiff’s loss.
  3. Uncertain Terms: The contract’s terms lack clarity and cannot be definitively determined.
  4. Absence of Consideration: The contract lacks valid consideration, making it unenforceable.
  5. Great Hardship: Enforcing the contract would impose undue hardship on the defendant.
  6. Defective Title: The plaintiff cannot provide a clear and valid title to the property as per the contract.
  7. Misrepresentation: The defendant’s consent was obtained through misrepresentation of facts.
  8. Mistake of Fact: The defendant’s consent was given under a mistaken understanding of the facts.
  9. Inadequate Consideration: The consideration provided by the plaintiff is significantly inadequate, suggesting fraud or undue advantage.
  10. Contract Made by Company in Excess of its Powers: The contract was made by a company exceeding its authorized powers.
  11. Unfair Advantage to the Plaintiff: The contract unfairly benefits the plaintiff at the expense of the defendant.
  12. Laps of Time: The lawsuit for specific performance was filed beyond the prescribed time limit of three years.

Conclusion

Specific performance ensures the actual execution of a contract. However, it is a discretionary remedy, and courts will not grant it when monetary compensation is sufficient. Section 21 of the Specific Relief Act outlines contracts that cannot be specifically enforced, and defendants have various defenses available to challenge such claims.