If a Contract Goes Unfulfilled: Legal Remedies and Specific Performance

By Benjamin Fleshman

Try as we might, some contracts simply go unfulfilled. This is a problem in the business world, because it can cost your company a lot of money if some other party defaults on a contract. There are a few different things that can be done when another party fails to comply with the terms of the contract. One of these potential actions is known by the name of “specific performance.

What is Specific Performance?

Specific performance is defined by Legal Dictionary as “an extraordinary equitable remedy that compels a party to execute a contract according to the precise terms agreed upon or to execute it substantially so that, under the circumstances, justice will be done between the parties.”

When a contract is breached, the aggrieved party has two basic options: litigate for losses and damages occurred, or get a court sanctioned order for a specific performance. When a company selects to have the courts order a mandate for a specific performance, the court is demanding that the offending party fulfill the terms of the contract rather than pay for damages.

This is a bit of a hard ball route to follow, but it can pay off. Because specific performance is issued by a court system, it is enforced by the power of that same system. If the offending party refuses to fulfill the terms of the contract when a specific performance has been issued, they can be held in contempt, fined, or arrested. This ability to enforce is one of the main reasons that aggrieved parties request specific performance of contracts.

When Should I Request Specific Performance?

Remember the specific situation of the other party. It would obviously not be worth the money and effort to request specific performance from an entity who failed to fulfill the contract because they obviously were incapable of doing so (e.g. a farmer whose crops failed cannot provide the promised grain, so there is little point in requesting it from him any further).

The courts issue specific performance in accordance with the laws of equity. Therefore, Typically, they typically grant specific performance only in situations where monetary compensation would be inadequate. This means that, in most cases, you should sue for damages, as most goods can be repurchased or paid for in a manner adequate to compensate for damages.

In any situation where monetary compensation would not be sufficient, sue for specific performance.

For example, contrast the following two situations. Joe buys a generic car from Shelly. He pays for the car, signs the contract online, and then goes to pick it up, and Shelly won’t give it to him. Nor will she return his money. Joe could sue for damages, and request that his money be returned, but he would not likely receive specific performance, because the car is replaceable. It can be bought anywhere.

Suppose instead that Joe bought a one of a kind sports car from Andy. The same thing happens, and Joe takes Andy to court. In this case, because the car is a one of a kind item whose value cannot be sufficiently compensated by money, the court would be more likely to grant specific performance and demand that Andy hand over the car to Joe.

Sentimental value is not enough, however, to request specific performance. The good/service in question must be irreplaceable, or valuable to a point that money would not fully replace it, in order for the court to mandate specific performance of a contract.

So, if you are facing a breach of contract situation, and you are also considering litigation, specific performance may not be the best option for you. It is a good option, but only in a very specific situation.