SPECIFIC PERFORMANCE OF CONTRACT

This article is written by Harshita Rathore of BALL.B of 3^rd Semester of RNB Global University, Bikaner, an intern under Legal Vidhiya.

ABSTRACT

When monetary damages are insufficient, specific performance is a crucial remedy in contract law that forces parties to carry out their end of the bargain. By giving the harmed party, the full benefit of the contract, it seeks to uphold justice as an equitable remedy, particularly when it comes to situations involving bespoke services, real estate, or unique items. This study explores the idea, definition, and tenets of specific performance, analysing how it is applied in Indian law through the Specific Relief Act, 1963, and contrasting it with common law systems such as the US and the UK. The requirements for giving particular performance—such as mutuality, inadequacy of damages, and feasibility—as well as its drawbacks—such as personal service contracts, uncertainty, and impossibility—are examined in this study. The practical nuances and dynamic character of this remedy are further highlighted by judicial interpretations and seminal instances. In a time of intricate transactions and alternative dispute resolution procedures, the applicability and flexibility of particular performance are examined closely. In order to improve the practical implementation of this remedy in contemporary contract law, the study’s conclusion highlights the significance of striking a balance between equity, business efficiency, and enforceability.

Keywords

Specific Relief Act, Specific Performance, Contract, Agreement, Monetary damages, Reimbursement, Movable Property, Immovable Property

INTRODUCTION

An agreement formed in exchange for performing or not doing anything specific is called a contract. If the party to the contract fails to fulfil their end of the promise, the other party may demand that the terms of the contract be fulfilled literally and in full or seek reimbursement for the non-fulfilment. We refer to the former as “specific performance. Fry, in contrast to damages or reparation for loss of the contract, argued that “the specific performance” of a contract is its performance in accordance with the terms and obligations “of the contract”. The Specific Relief Act, also known as the specific relief law in India first came into effect in 1877. The Law Commission analysed this enactment’s provision in its Ninth Report, and was later overshadowed by the present Act of 1963. The compensation available at the court’s discretion for the enforcement of individual civil rights are covered by the Specific Relief Act of 1963. Compensation or reparations for losses incurred are the aggrieved party’s general remedy in the event of a contract breach .A civil suit is filed by the party against the party defaulting in the performance i.e. not fulfilling his obligations under the terms of agreement as per Sections 73-75 of Indian Contract Act, 1872. In case plaintiff is not satisfied with monetary compensation, he can pray for specific relief. E.g., a person may be able to recover possession of property without asking for any compensation if he wrongfully dispossessed of it and no other right justifying present possession is set up.

CLASSES OF SPECIFIC RELIEF

•  Specific performance of contract: This cure forces the party to fulfil their end of the bargain.
•  Injunction An injunction is a court order that forbids someone from doing something or mandates that they do something.
•  Declaratory Relief The court may specify the rights of parties in a dispute under Section 34.
•  Rescission of Contracts Rescission is the process of ceasing  a contract and returning the parties to their pre-agreement states.
• Rectification of Instruments Correcting mistakes or inaccuracies in a written contract or document is known as rectification.
• Cancellation of Instruments A document that is void or voidable and could be harmful if kept in force is cancelled.
• Possession of Immovable Property For those who have been unlawfully depleted of real estate, the Act offers reimbursement.
• Possession of movable Property The Act also permits the recovery of movable goods that someone else has wrongfully withheld.

SPECIFIC PERFORMANCE OF CONTRACT

When pecuniary damages are insufficient to compensate the harmed party, a court-ordered remedy known as specific performance requires the party to carry out its contractual responsibilities. In contract law, specific performance is an equitable remedy that requires a party to carry out their end of the bargain. Specific performance guarantees that the contract is carried out according to its original terms, as opposed to monetary damages, which make up for a breach. When the contract’s subject matter is unique or irreplaceable, this remedy is especially relevant.

For e.g. Assume that A and B agree to sell A’s special beachfront property to B for ₹50 lakhs. B promises to pay the whole sum within a month after making an advance payment of ₹10 lakhs. However, A chooses to sell the house to C for a higher sum before the deal is finalised. B may petition the court in this situation to have the contract performed specifically. Due to the property’s uniqueness, the court may require A to perform the contract and provide the property to B because monetary damages (such as an advance of ₹10 lakhs plus compensation) might not be sufficient.

For e.g. Let’s assume X agrees to pay ₹20 lakhs to Y for a rare antique painting. After Y pays the entire amount, X says the painting is now worth ₹30 lakhs and won’t deliver it. Since the picture is priceless and money cannot make up for its loss, Y brings a lawsuit for specific performance. Given the painting’s singularity, the court might order X to give it to Y. Let’s say X agrees to pay ₹20 lakhs to Y for a rare antique painting. After Y pays the entire amount, X says the painting is now worth ₹30 lakhs and won’t deliver it. Since the picture is priceless and money cannot make up for its loss, Y brings a lawsuit for specific performance. Given the painting’s exclusivity, the court might order X to give it to Y.

CIRCUMSTANCES WHERE SPECIFIC PERFORMANCE OF CONTRACT IS ENFORCEABLE

The operability of specific performance is governed by Section 10 and related provisions of the Specific Relief Act, 1963:

• Monetary Damages are Scant- When monetary damages are not enough to correct the violation, specific performance is enforceable. For example, monetary damages could not be sufficient relief in contracts involving rare or irreplaceable objects, such as antiques, rare goods, or real estate.
• Subject Matter is Unique or Valuable- A unique or particularly valuable topic for the party who feels wronged must be covered by the contract. Among the examples are: contracts for real estate or immovable property (because land is unique).
• Mutuality of Obligations- Under the terms of the contract, both parties must have enforceable liability. According to Section 16, a party cannot demand specific performance if they have not carried out their contractual obligations or are not prepared and willing to do so.
• Feasibility of Enforcement- The court must be competent to practically enforce the contract’s execution. The court may reject specified performance if it is unable to adequately monitor or enforce the performance.
• Legality and Validity of the Contract- According to the Indian Contract Act, 1872 contract should be enforceable and it should be capable of performance. Agreements that are void and unenforceable, illegal or vague cannot be enforced through specific performance.
• Plaintiff’s Conduct (Clean Hands Doctrine)- In order to get particular performance, the plaintiff must come before the court in good standing, which means they cannot have acted dishonestly, unfairly, or in ill faith. In order to fulfil their end of the bargain, the plaintiff must also demonstrate their preparedness and willingness.
• Compliance with Statutory Provisions- Except as specified in Section 14 of the Specific Relief Act, specific performance is enforceable. Examples of these exclusions include: contracts that call for a person’s abilities, skills, or credentials (e.g., employment contracts).
• Absence of Alternative Remedies- If other remedies, like reimbursement or cancellation, are insufficient to remedy the wrong, specific performance will be awarded.

ADVANTAGES OF SPECIFIC PERFORMANCE

1. Preservation of the Agreed Terms- The aggrieved party is guaranteed to obtain precisely what they agreed upon in the contract as a consequence to specific performance. By enforcing the parties’ original agreement, this remedy upholds the contract’s validity.
2. Adequacy in Cases of Unique Subject Matter- Monetary damages are inadequate recompense when the subject matter of a contract exists that is uncommon, distinctive, or irreplaceable.
3. Protection Against Unfair Advantage- The innocent party cannot unduly profit from the breaching party’s actions if specific performance is performed.
4. Certainty and Predictability in Contracts- By guaranteeing that parties keep their end of the reach an agreement, the availability of particular performance improves the dependability of contracts.
5. Promotion of Equity and Justice- The goal of specific performance is to produce fair results and is based on equitable principles.
6. Encourages Performance of Obligations- When parties are aware that they may be compelled to fulfil their obligations, they are more likely to do so
7. Significance in Commercial and Real Estate Deals- It guarantees that time-sensitive commitments are met in business transactions, maintaining operations and business relationships.

LIMITATIONS OF SPECIFIC RELIEF

1. Discretionary Nature of the Remedy- Despite becoming easier to acquire solely due to the 2018 modification to the Specific Relief Act, specific performance is still occasionally at the court’s discretion.
2. Contracts Requiring Personal Skills or Service- Specific enforcement is not possible for contracts that rely on individual skill, aptitude, or trust.
3. Uncertain or Incomplete Contracts- Uncertain, unclear, or incomplete contracts are not eligible for specific performance.
4. Impossibility of Performance- Unexpected events that make it impossible to fulfil a contract are not enforceable.
5. Statutory and Public Policy Restrictions- Contracts that contravene public policy or legal rules are unenforceable.

EXAMPLES OF SPECIFIC PERFORMANCE

1. A consents to pay B ₹50 lakhs for a special piece of beachfront real estate. A promises to pay compensation instead of completing the sale even when B pays a ₹10 lakh advance. The property’s value cannot be replaced by monetary damages because it is unique. In accordance with the agreement, the court may order A to give the property to B, as B had request particular performance.
2. For ₹20 lakhs, X agrees to sell Y a rare antique painting. After Y makes the agreed-upon payment, X declines to deliver the picture, claiming that another bidder has made a better offer. Since the painting is one-of-a-kind, money cannot buy it. In order to force X to deliver the painting in accordance with the terms of the contract, Y may file for specific performance.
3. A consents to sell B 40% of their private firm shares. Later, A declines, claiming that C has made a better offer. A private company’s shares are difficult to find on the open market, so B can look for specific performance to buy the agreed-upon shares.
4. To develop a specialised product, two companies form a joint venture. The project is put in danger when one side tries to back out of the agreement halfway through the development. In order to enforce the partnership agreement, the other party may request specific performance, particularly if their participation is essential to the development of the product.
5. For a set period of ten years, P consents to lease a commercial building to Q. P intends to lease it to another party for a higher fee after refusing to uphold the agreement after collecting a portion of the leasing payment. Since immovable property is regarded by the law as unique, Q may request specific performance in order to execute the lease agreement.
6. A family member consents to give another family member their portion of the inherited property. They decline to close the deal after getting an advance. Given that inherited property sometimes has special emotional and familial significance, the buyer may want specific performance.

 LANDMARK CASES

1. Ardeshir H. Mama v. Flora Sassoon (1928)[1]– According to the Privy Council, the plaintiff must exhibit “readiness and willingness” to fulfil their end of the agreement throughout the transaction in order for specific performance to be granted. In order to provide equitable assistance, this principle is necessary.
2. K. Narendra v. Riviera Apartments (P) Ltd. (1999)[2]– The Supreme Court emphasised the uniqueness of immovable property in its decision in favour of specific performance. In this instance, monetary damages were judged insufficient to address the violation.
3. Laxman Tatyaba Kankate v. Taramati Harishchandra Dhatrak[3] (2010)- Because it would put the seller through excessive hardship, the Supreme Court denied particular performance. The court underlined how vital it is to take equity and justice into account while awarding particular remedy.
4. Nathulal v. Phoolchand (1970)[4]– Because the buyer showed that they were prepared and willing to fulfil their end of the bargain, the Supreme Court ruled that particular performance could be awarded, meeting a crucial legal norm.
5. Ramakrishna Pillai v. K. Narayana Pillai[5] (1967)- The Supreme Court emphasised that the contract was unfair and rejected specific performance. The court restated that in order to offer this remedy, fairness is essential.

CONCLUSION

In conclusion In situations where monetary compensation is insufficient, the idea of particular performance of a contract emphasises the need of keeping promises and guaranteeing justice. It is an equitable remedy intended to preserve the integrity of contracts while weighing the interests of both sides. In situations when the subject matter is unique or irreplaceable, like rare products or real estate, specific performance is an effective strategy. It guarantees that the harmed party gets the precise advantage they agreed upon by forcing the defaulting party to carry out their end of the arrangement. This solution isn’t given out randomly, though. Before imposing particular performance, courts proceed with cautiously, taking into account aspects such as practicality, justice, and the effect on both parties. Fundamentally, particular performance embodies the idea that agreements are more than simply legal papers; they are also symbols of mutual commitments, trust, and expectations. In addition to protecting the person that has been wronged, the law upholds the fundamental principles of honesty and responsibility in contractual arrangements by requiring performance in worthy circumstances. To put it simply, particular performance is a remedy that ensures that commitments made are kept by bridging the gap between legal obligation and equitable justice.

REFERENCES

• Concept of specific relief http://student.manupatra.com/Academic/Abk/Law-of-Contract-and-Specific-Relief/Chapter-2.htm ( visited on 26^th December, 2024)
• When specific performance of contract is enforceable https://blog.ipleaders.in/when-specific-performance-of-contract-is-enforceable/ ( visited on 26^th December, 2024)
• Specific performance of contract https://www.drishtijudiciary.com/to-the-point/ttp-specific-relief-act/specific-performance-of-contracts-1 ( visited on 26^th December, 2024)
• Specific performance of contract https://www.indiacode.nic.in/bitstream/123456789/1583/7/A1963-47.pdf ( visited on 26^th December, 2024)

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[1]  Ardeshir H. Mama. V. Flora Sassoon  (1928)30BOMLR1242

[2]  K. Narendra V. Riviera Apartments (P) Ltd. AIR 1999 SUPREME COURT 2309

[3]  Laxman Tatyaba Kankate V. Taramati Harishchandra Dhatrak AIR 2010 SUPREME COURT 3025

[4]  Nathulal V  Phoolchand 1970 AIR 546 1970 SCR (2) 854 1969 SCC (3) 120

[5]  Ramakrishna Pillai V. K. Narayana Pillai AIR 1967 Ker 137

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