When most people think of breaches of contract, they think of the potential for monetary damages. Monetary damages are considered a legal remedy for addressing a breach of contract matter. But another category of remedies is known as equitable remedies.
Among these is something called specific performance. If you are defending against a breach of contract action, you should know about this type of remedy. At Rosenbaum & Taylor, we are experienced with all types of business litigation cases.
What Is Specific Performance?
Specific performance is a special form of equitable relief in contract law. In contract disputes where a monetary remedy would not adequately compensate the injured party, the court may order the party that violated the terms of the contract to fulfill its contractual obligation instead of awarding money to the plaintiff.
The goal is to put the plaintiff in the same position as if the contract had been fulfilled in the first place.
When Do Courts Order Specific Performance vs Monetary Damages?
Specific performance is basically forcing a person or business to fulfill contractual obligations. Monetary compensation is not appropriate or even desirable in all cases of breach of contract. The wronged party may ask the judge to compel the other company to perform its obligations under the contract instead.
This type of equitable remedy may be used at the court’s discretion. The most common reason for a specific performance order is that a contract deals with unique goods or services.
For example, a seller enters a real estate contract but then decides to keep the property. Real estate is considered unique. The buyer could seek specific performance as a legal remedy. The court could order the property owner to complete the sale at the agreed-on price.
In addition to real estate, courts may enforce specific performance for artwork, custom products, and goods in short supply.
Criteria for Specific Performance in New York
Not all contracts are eligible for this type of remedy. Indeed, courts typically prefer to award financial damages for a breach. To that end, there are some basic requirements the non-breaching party must demonstrate to obtain specific performance in a contract case:
- The existence of a valid and enforceable contract – If the contract is invalid or unenforceable for some reason, specific performance will not be available as a remedy.
- The non-breaching party (plaintiff) – is ready, willing, and able to perform the terms of the contract. This means the plaintiff is prepared to carry out its obligations under the contract.
- The breaching party (defendant) – can perform its obligations under the contract but has not. In other words, the defendant has failed to honor the agreement.
- There is no other adequate legal remedy available – That means simply that monetary damages will not be sufficient to render justice in the matter.
Indeed, there are certain types of contracts for which monetary damages will not suffice. In New York, the following contracts may be eligible for a specific performance remedy:
- The subject matter of the contract is unique, such as real property or custom-made goods.
- There is no established market value for the subject matter of the contract.
- The amount of damages is difficult to calculate.
Defending Against a Specific Performance of Contract Claim
If you’re defending against a specific performance claim, you may argue that monetary damages are more appropriate. In particular, you can try to show that these damages can, in fact, be calculated.
You may also dispute whether the subject matter is unique or there is no readily determinable market value. Take, for instance, the issue of custom-made goods. One limitation is that there has to be something special about the goods other than their price.
However, these arguments alone may not be enough. Even if, for instance, the damages can be calculated, the judge could opt for a specific performance remedy. The judge will be on the lookout for the most efficient and certain remedy, and that could be a specific performance.
As the defendant, you may also contend that specific performance would result in serious unfairness to you. Or, you can argue that specific performance would impose an undue hardship on your company. These and other arguments will depend almost entirely on the individual facts in your case. You should always consult an experienced New York contract litigation attorney.
Skilled Counsel for Breach of Contract Cases
Every contract litigation case is different, and that means the potential remedies will be as well. If your business is facing a breach of contract action, you need and deserve aggressive legal defense. In many cases, we can help you reach an out-of-court settlement. If this is not possible, we will fight for your rights in court.
We can also represent your business if another company has failed to honor a contract. We will pursue the fair resolution you deserve, whether that means financial compensation or specific performance of a contract.
Let the dedicated attorneys of Rosenbaum & Taylor help. Contact us today to discuss your case.
