Can specific performance be obtained for a contract breach?

In cases of a breach of contract, specific performance can be obtained. Specific performance is a remedy that enforces a promise, whereby a court can order a party to perform its contractual obligations. For this remedy to take place it must be established that there is a binding contract and that the other party has breached the contract.

Is the contract valid? 

In order for a contract to be valid it must satisfy the elements of formation and be enforceable.

The three principle formative elements include:

• Agreement (offer and acceptance) 
• Consideration (exchange of something of value) 
• Intention (intention to be legally bound and create legal relations)

Other elements of a contract include: 

• Legal capacity (whether an individual is legally allowed to enter into a contract) 
• Consent (free will and proper understanding)

Actual breach vs Anticipatory breach 

The two forms of breach in this situation are actual breach and anticipatory breach. Actual breach is where a party fails to perform their obligations under the contract. Anticipatory breach differs as it is where a party shows an intention to not perform their obligations. The innocent party must prove either one of these breaches to obtain an order of specific performance. 

Where specific performance will be denied

Specific performance will not apply to circumstances such as:

• When damages adequately compensate the innocent party: specific performance is only applicable when damages aren’t adequate.
• The contract may contain a right of termination: if the contract had a term that allowed either party to terminate at will, then specific performance cannot be enforced. 
• Whether the contract was formed with free will and genuine consent: a contract is spoiled when it falls under the five vitiating factors which are- duress, misrepresentation, mistake, undue influence and unconscionability.
• Where the contract is void, voidable or unenforceable 
• The Contract requires constant supervision: Specific performance will be denied where the courts are burdened with the task of supervising the performance.
• The defence of hardship: In Evans v Robcorp Pty Ltd [2014] the defence of hardship was successfully pleaded in defence to a  summary application of specific performance due to the fact of financial hardship. 
• Where the specific performance is impossible to perform. 
• Where mutuality was lacking during the agreement of the contract.
• Where a contract is too vague- if a contract is too vague it cannot be enforced as the court may be uncertain as to what the obligation is. 
• Where the performance consists of a personal relationship: a court will not order the remedy of specific performance where it forces the defendant to maintain a relationship, e.g. an employment relationship.
• Where the claimant has acted with unclean hands: a court will not enforce a specific performance order where it has been found that the claimant has acted in bad faith. 
• Where the plaintiff cannot or will not perform their obligations. 

What happens if a party refuses to comply with an order of specific performance? 

Consequences arise when a party fails to comply with an order of specific performance. That party may be found guilty of contempt in court which can thus result in fines or even imprisonment. 

Conclusion 

Ultimately, the equitable remedy of specific performance can be obtained in cases of breach of contracts where a valid contract and breach of contract is proven. You should seek legal advice If you believe that a party has breached your contract and an order of specific performance is needed. The open legal team is always open to provide legal advice if you need to clarify whether your contract can obtain specific performance. Reach out to us via the contact form or by calling 1300 337 997.