Specific Performance of Contract
When there is a contract there is an obligation of performance of such contract, in our law it is coined as specific performance of contract. We can sue a party if they refuse to perform their part of the contract but before suing or even before contracting we need to know the law of specific performance of contract.
According to the Specific Relief Act, 1877 we can sue for specific performance but to do that we must keep the law in mind and we shall proceed with caution.
Let’s see our options for specific performance of contract and what we should keep in our mind to avoid future conflict.
What is meant by specific performance of contract?
What is meant by specific performance?
Specific Performance is an equitable remedy of contract, a civil court can issue an order requiring a party to perform a specific act.
Specific performance is an equitable Specific Relief given by a Court against a party where the party refused to execute the specific application according to the contract?
Specific performance of contract
Contract is the precondition for specific performance of contract, if there is no contract whether expressed or implied there will be no specific performance.
A Court provides an order of specific performance of contract in some special and specific circumstances, where the general compensation for a breach of contract is not enough or where such compensation is not adequate to serve the purpose of the contract.
The term “specific performance” referred to the literal performance of one’s obligation under a contract. it cannot be a new obligation.
In order to get an order of specific performance, the plaintiff must come with clean hands and he must be ready to perform his part of the contract.
The provision of specific performance of contract is laid down under the Specific Relief Act, 1877.
Where specific performance is allowed
According to Section 12 of specific performance act 1877. In the following situation-specific performance can be provided by the court with his discretion unless otherwise provided in Chapter 2 (section 21)
- (a) Act part of a trust
when the act agreed to be done is in the performance, wholly or partly, of a trust;
- (b) No standard to ascertain damage
Where there is no standard to a certain actual damage for the non performance of contract.
A agrees to sell a painting of Joynal Abedin to B and B agrees to buy the same. Now, if A refuses to sell the painting to B, B can acquire an order of specific performance of contract as there is no standard way to ascertain the actual damage if the contract is not performed.
- (c) No adequate relief
If the situation is such that after the non-performance of contract no pecuniary compensation would be adequate as relief then there will be no order of specific performance.
In Saru Meah Sowdagor Vs. Jahanara Begum 8 DLR 616 it is held that, Presumption under section 12 is that, Breach of contract for sale of immovable property can not be adequate relief by a money payment
- (d) No pecuniary compensation
Where there is a possibility that no pecuniary compensation will be available after the breach of a contract.
Unless or until the contrary is provided, the contract shall presume the breach of contract to transfer of immovable property cannot be adequately relieved by compensation in money.
When specific performance of contract is not specifically enforceable
According to Section 21 of Specific Relief Act, 1877 the following contract cannot be enforceable.
- (a) Adequate relief
When the compensation for non-performance is an adequate relief.
It means where money payment on the breach of a contract would be good enough to satisfy the object of the court or the opposite party, then specific performance shall not be accepted as a relief.
A contracted B to sell 10 pieces of laptop for his office but later B refused to take those laptops. Specific performance would not be enforceable as A can be reimbursed by monetary compensation because it was a business deal and his aim was to profit from those sales.
- (b) Not enforceable by the court / Personal qualification
Some contracts by nature are such that the court cannot force it by force or if enforced court can not evaluate its execution, in such cases the court shall not allow specific performance of contract.
– contract with numerous details
– contract which depends on the personal qualification of a party.
A contract for singing in a concert can not be enforceable by the court as it depends on the personal qualification of the singer.
- (c) Uncertainty of contract
When the term of contract is such that it is not properly defined or uncertain. such contract cannot be enforced
A contracted with B to rent him a furnished house, later B refused to rent him such furnished house. This contract is not enforceable due to its vague term of “furnished”, as no description was given to what kind of furniture would be provided.
- (d) Revocable contract
Where a contract by its nature is revocable then that contract is not enforceable by law.
A, D and C contracted to partners of an IT firm but the contract did not include the duration of the partnership. therefore it is revocable by its nature and cannot be enforced.
- (e) Ultra vires act by trustees
When the contract is made in excess of the power of a trustee or in breach of their trust that contract shall not be specifically enforceable.
A guarantor/creator of a trust entrusted his trust property to rent or lease and share the money to the beneficiary but the trustee contracted to sell the property violating the trust condition. That sell contract shall not be enforceable.
- (f) Ultra vires act by director/ promoters
When a Director or Promoter of a company contracts in the access of his/her power of that is given by the article of association or memorandum of association or by any law that contract cannot be specifically performed.
A company registered as an IT company contracted Care Hospital to sell mask, this contract cannot be enforceable
- (g) Duration of execution
Where there is a contract of which performance requires continuous duty extending over a longer period than three years from its date
A contracted D to sell a car, along with the condition that he will provide all parts and service for that car for the next 10 years.
- (h) Ceased to exist
Where both of the parties of a contract believe that the material part of the contract is in existence but in reality, it ceased to exist before the agreement of the contract, in such a situation that contract cannot be specifically performed.
A contracted B to provide B 20 tons of Apple, both believing that A’s ship is on its way from the UK, after their agreements they came to know that A’s ship sunk 2 hours prior to the agreement to sell apple to B, their contract this contract is not enforceable.
Specific Performance of contract is a civil suit, it must follow all the civil procedure required. Please follow this article to know more about the civil procedure of civil suit: Stages of a Civil Suit [CPC 101]
According to article 113 of The Limitation Act, 1908 the suit for breach of contract must be filed within one year from the date fixed for performance or if no such date is fixed, when the plaintiff has noticed that the performance is refused.
Court fees: Ad-valorem Court fees to be paid in case of specific relief.
Know more about court fees here [In Bangla]
In order to get a complete view of specific performance of contract, section 12 and section 21 must be read with the provisions of section 21A and section 22 of The Specific Relief Act, 1877.
Contract to be registered
Section 21 A provided, no contract for a sale of immovable property can be specifically enforced unless
- That is written as registered under Registration Act, 1908
- Balance amount of consideration of contract is deposited to the court during the filing of the suit.
[added on 2004 and enforced from 1st July 2005]
Discretion of the Court
Section 22 made it clear that the power of a court to grant specific performance of contract is a discretionary power.
Court is not bound to grant a relief early because it fits in the criteria of the provision, but that does not provide a court an arbitrary power to be sound and reasonable at shall and also comply with judicial principle. Moreover, it could be corrected by a higher court.
Consideration for discretion
A court will consider the following matters a degree of specific performance of contract not to be given
- Where, if specific performance is permitted, the plaintiff to get unfair advantages over the defendant.
- Where performance of contract would involve some hardship on the defendant which he would not foresee.
- Where the plant has done substantial acts or suffers losses in the consequence of a contract, he is capable of specific performance in his favour.
A contract with a railway company, in the contract he was responsible to prepare the land and the company was liable to lay railway track. A does his part, therefore A will get the contract in his favour and the railway company would be ordered to execute his part of the contract.
These are some general law of Contract and law of Specific Relief Act but this is not the end of law, where there is no option of specific performance of contract there are other options according to the law but generally, specific relief is the first priority when there is a breach of contract.