Specific performance in contract disputes explained

In contractual disputes where there has been a breach of contract the usual remedy would be for the innocent party to sue the defaulting party for the loss and damage suffered as a consequence of the other party’s breach.  However, there will be situations where damages are not an adequate remedy for the innocent party, and they may instead wish to apply to the Court for an order compelling the defaulting party to comply with their contractual obligations; this is called “specific performance”.

There is no general right to specific performance, it is a discretionary remedy available to the Court and it will be used when no other remedy (such as money) will adequately compensate the innocent party.  If this remedy will put the innocent party back into the position that they should have been in had the contract been fully performed, then the Court may order specific performance.

The most common instance when the courts grant specific performance is where the subject of the contract is unique, when it is not merely a matter of money or where the true amount of damages is unclear.  An example of the subject matter of the contract being unique may be the sale of an interest in land. Where damages would be ineffective might include situations where the terms of the contract restrict or limit the amount of damages recoverable for the breach in question by the defaulting party.

In order to qualify for specific performance, the innocent party must demonstrate that there is a valid and enforceable contract in place and that the award of damages would not be an adequate remedy for the breach.

A key benefit of specific performance is that it can be used where a breach of contract is anticipated but has not yet occurred and the innocent party wishes the existing contract to be performed rather than to seek damages.  Where a breach is anticipated, the innocent party can apply for an order for specific performance before the contract has been breached. By comparison, a claim for damages can generally only be made after there has been a breach of the contract.

Another advantage of specific performance is that the innocent party need not prove any loss caused by the breach; they simply needs to show that the obligation has not been or will not be performed.

Specific performance is a discretionary remedy which is not exercised readily by the courts even in cases where damages are not an adequate remedy. However, when it is applied, it is a powerful tool which can be used to force a party to comply with their contractual obligations.

If you are involved in any contractual dispute, please call our Dispute Resolution team on 0113 207 000.