What Does ‘Specific Performance’ Mean in a Contract Dispute?

When a contract is breached, damages are meant to put the wronged party in the position it would have been in if the other party honoured its contractual obligations. This requires the court to examine the contract, what it was worth and what loss the wronged party suffered.

Specific performance is frequently used in litigation when contracts are breached, especially with property when vendors refuse to convey title, and compensation via damages cannot be met or is an inadequate remedy. A breach of contract regarding non-fungible items such as art or heirlooms may also use specific performance as a remedy. 

A Recent Fair Legal Specific Performance Case 

Fair Legal recently represented a client suing for specific performance of a right of first refusal, where the other side had agreed to give our client the right to purchase valuable and unique property if they ever wanted to sell. The other side refused to honour the agreement, but we were ultimately successful in enforcing specific performance. ' 

From Our Client:

Like most people, I had never needed a litigator to solve a high-stakes legal dispute.  That was true, until someone breached a high-stakes contract with me. The contract was made in 1987, but it remained as valid as the day it was made. When it was finally time to execute the contract, as determined by the counterparty, they refused to honour the terms of their agreement. The contract was for a time-sensitive and valuable business deal that, once executed, would become part of a subsequent business deal per my agreement with other business partners. These deals were frustrated and I could have been sued for breach of the second agreement, unless I could enforce my rights with the first agreement.

Thankfully, I had recently attended a business networking event where I became acquainted with Charles Fair, who is passionate about helping others and ensuring their rights are protected. Charles provided compassionate and expert advice, including an explanation of how specific performance would be the most suitable remedy in this matter. He, with his team, conferred with the defendant's lawyer (and other lawyers for myself and my business partners), filed documents, and attended hearings to have this matter resolved as quickly as possible. This was completed in a few weeks (not years) and during the onset of the COVID-19 pandemic, when in-person meetings were not recommended or restricted. The matter was resolved to my full satisfaction so both deals could proceed, as agreed.

I was grateful to have Charles represent me in this matter and would highly recommend his services to anyone who needs a compassionate and expert litigator to protect their rights.

 

Let’s take a brief look at how and when specific performance can be used as an equitable remedy.

What is specific performance? 

Specific performance is a remedy for a breach of contract available to an aggrieved party. This order emphasizes the performance of contractual obligations. While damages are available as a right, specific performance is granted at the court’s discretion where damages (typically monetary compensation) are deemed to be an inadequate remedy. 

As a wronged party, am I obligated to choose specific performance as a remedy? 

No. You may choose either damages or specific performance. With specific performance, the court requires the breaching party to fulfill the agreement as promised. If you choose the money equivalent to your entire loss, you may not also seek specific performance. You cannot by law seek both, otherwise, you would receive double the contract’s value.

What does the court need to grant me specific performance as a remedy?

Specific performance is discretionary and exceptional. To grant specific performance, the following is required:

1. You must possess a valid, enforceable contract (i.e. offer, acceptance, consideration, intention to create legal relations and certainty of terms); and
2. You must prove damages would not be an adequate remedy. 

How can I establish that damages are not an adequate remedy? 

In most cases, damages are an adequate remedy if you can readily enter into a substitute contract for a performance that is equivalent to that promised by the defaulting party. You would then be adequately compensated by damages based on the difference between the price of performance in the original contract and the price agreed on in the substitute contract.

To establish that damages are not adequate, you will have to prove, with evidence, either that the subject matter of the contract is unique, damages are impossible to calculate, or that the damages would be financially ineffective. It’s important to note that a purchaser seeking specific performance bears the burden of proving that the property is unique.

• An example of rare or unique subject matter would be an antique vase that is invaluable and no market substitute may exist.
• Another example where damages are insufficient is when a defaulting party is insolvent and unable to pay.

On what grounds can specific performance be refused? 

1. The agreement has been properly terminated.
2. The performance of the obligation would be difficult to supervise, i.e. it would be difficult for a court to determine if the party is in compliance with the obligation.
3. The agreement contains an element of personal service.

What process does the court undergo to award specific performance?

Even though the plaintiff can elect to claim specific performance from the defendant, the court has the discretion to grant or decline the order of specific performance. This discretion is exercised judicially and does not adhere to rigid rules. To be granted specific performance, the plaintiff must prove that “common law damages for breach of contract will not suffice to do justice.”

Courts decide each case according to their facts and circumstances. A plaintiff has a right of election whether to claim specific performance from the defendant or damages for breach of contract. The defendant cannot exercise or enjoy any right in this matter.

What should I consider before determining specific performance is the desired remedy? 

These are some practical factors to consider if you are considering requesting specific performance:

1. Time of the court process: Regardless of whether you apply to common or civil law court in Canada, it can take up to two years before specific performance is obtained.
2. Financial state of the buyer/seller: While awaiting judgment, a buyer might lose financing, meaning specific performance may be difficult to execute.
3. Risk of the business: Buyers seeking specific performance rely on the seller to still conduct business. However, the business may not be in the state that the buyer expects at the time the judgment is rendered.

Enforcing specific performance as a remedy can be complicated to prove. A civil litigation lawyer can help you evaluate the merits of your claim and the possibility of specific performance. They will also file your claim and represent you in court. It’s always advisable to consult legal advice in deciding how to proceed if you experience a breach of contract.

Calgary Civil Litigation Lawyer

Litigation cases are about disputes that have usually arise because of broken contracts, negligence, or other failures to respect personal rights and obligations. Litigation is a process of resolving disputes in a court of law, usually with a judge. 

Civil litigation lawyer Charles Fair is prepared to defend your rights and provide representation to individuals or businesses to right a wrong, honour an agreement or obtain compensation for a personal injury. Contact us at 1 (403) 239-2249 to schedule a confidential meeting with a member of our legal team.