Specific performance is an order of the court that requires the breaching party to actually perform their obligations under the contract. This is a powerful remedy, but it is not always available.
Have you ever signed a valid contract, only to have the other party break their promises? If so, you may be wondering what your options are. In Australia, one possible remedy is specific performance.
In this article, we will explore the requirements for specific performance in Australian contract law. We will also discuss some of the factors that the court will consider when deciding whether to grant this remedy.
Meaning of Specific Performance
Specific performance is an equitable relief or remedy available under Australian contract law. It is an order directing the breaching party to perform the contract in the way specified by the court. This type of award aims to put the plaintiff in the same position as if the breach had never occurred, not a better position.
A court order for specific performance is granted where a breach of contract has occurred. However, the court need not award specific performance, even where they establish breach. The court’s discretion is based on several factors. Read the section below to check the factors.
Factors Considered by the Court in Granting Orders
The court’s discretion in granting specific performance in Australia is based on several factors, including:
- The existence of a binding contract
- The breach of the contract
- The plaintiff as the party seeking specific performance
- Whether damages would be an adequate remedy
- Whether specific performance would cause severe hardship to the defendant
- Whether the contract was unconscionable
- Whether the claimant has misbehaved (unclean hands)
- Whether specific performance is impossible
Specific performance is a discretionary remedy and court will not grant this in every case where a breach of contract has occurred. The court’s discretion is based on the particular circumstances of the case and the need to achieve justice between the parties.
Important Principles in Contract Law Regarding Specific Performance
- Specific performance is an equitable remedy. An equitable remedy means that it is not a right that is automatically available to the innocent party. The court has discretion to grant or refuse specific performance and will consider all of the relevant factors before making a decision.
- Specific performance is only available if damages are inadequate. This means that the court will not grant specific performance if the innocent party can receive adequate compensation by monetary damages.
- Specific performance is only available if the contract is specifically enforceable. In general, only fair and equitable contracts with specific performance conditions are enforceable. A specific performance clause may not be enforceable if the court finds the contract to be unjust or one-sided.
Alternatives to Specific Performance for Enforcing Contracts
There are several alternatives to specific performance for enforcing contracts in Australia:
- Rescission. This is the cancellation of the contract, which puts the parties back in the position they were in before they made the contract.
- Termination. This is the ending of the contract, which may entitle the innocent party to damages.
- Damages. This is compensation for the loss suffered as a result of the breach of contract. Damages for breach of contract for the sale of land can be measured by the difference between the purchase price and the market value of the land at the date of completion, assessed at the date of the breach together with incidental expenses which have necessarily flowed from the breach.
- Forfeiture of deposit. This is where the vendor retains the deposit paid by the purchaser as compensation for the breach of contract.
- Rectification. This is the correction of a mistake in the contract, which may be an alternative to specific performance where the mistake can be rectified.
Sample Scenarios Involving Specific Performance
Specific performance is a legal remedy that is typically applicable in situations where one party has breached a contract. Here are some scenarios when specific performance is applicable:
- Sale of property. If a seller of a property executes a purchase agreement with a buyer and then decides they do not want to sell the property shortly thereafter, specific performance can be applicable to enforce the agreement.
- Sale of land. If two parties make a binding contract for the purchase of a block of land, but one party later refuses to give the land, specific performance can be applicable to order the person to sell the land.
- Contractual obligations. If a party defaults on its contractual obligation, specific performance can be applied to order the party to fulfill the obligations.
- Breach of contract. Specific performance can be a remedy for breach of contract, where the court orders the breaching party to comply with the terms of the contract. It asserts that parties to a contract are to perform the exact terms of the contract as they promised to do when the contract was signed.
Specific Performance vs. Damages as Remedy for Breach of Contract
Specific performance is an appropriate remedy that requires the breaching party to perform the exact terms of the contract, while damages are a remedy that can adequately compensate the non-breaching party for the loss suffered as a result of the breach of contract. The choice of remedy will depend on the particular circumstances of the case and the need to achieve justice between the parties.
Moreover, specific performance is typically applicable when the contract involves unique items, such as real estate, or when damages are not an adequate remedy. Damages are awarded when the contract involves goods or services that can be easily replaced or when specific performance is not feasible.
Lastly, specific performance can be difficult to enforce, especially if the breaching party is unwilling or unable to perform the contract. Damages, on the other hand, can be easier to enforce than specific performance, as they involve the payment of money.
Contract Lawyers at JB Solicitors
Are you in need of a contract lawyer in Australia for your business contracts? Look no further! Our team of experienced lawyers at JB Solicitors can assist you with a wide range of contract law matters.
At our law firm, we are committed to achieving the best possible outcome for our clients. Contact us today to schedule a consultation with one of our experienced contract lawyers