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This question is from Business Law

What is the rationale behind the law’s prohibition on a court ordering “specific performance” as a remedy for a breach of a “personal services” contract? Do you agree or disagree with this rationale?

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Specific Performance

The equitable remedy of specific performance calls for the performance of the act promised in the contract. This remedy is attractive to a nonbreaching party because it provides the exact bargain promised in the contract. It also avoids some of the problems inherent in a suit for monetary damages, such as collecting a judgment and arranging another contract. Moreover, the actual performance may be more valuable (to the promisee) than the monetary damages.

Normally, however, specific performance will not be granted unless the party’s legal remedy (monetary damages) is inadequate.footstar.png For this reason, contracts for the sale of goods rarely qualify for specific performance. Monetary damages ordinarily are adequate in sales contracts because substantially identical goods can be bought or sold in the market. Only if the goods are unique will a court grant specific performance. For instance, paintings, sculptures, and rare books and coins are often unique, and monetary damages will not enable a buyer to obtain substantially identical substitutes in the market.

Sale of Land

Learning Objective 2

When do courts grant specific performance as a remedy?

A court may grant specific performance to a buyer in an action for a breach of contract involving the sale of land. In this situation, the legal remedy of monetary damages may not compensate the buyer adequately because every parcel of land is unique. The same land in the same location obviously cannot be obtained elsewhere. Only when specific performance is unavailable (such as when the seller has sold the property to someone else) will damages be awarded instead.

Case Example 17.10

Developer Charles Ghidorzi formed Crabtree Ridge, LLC, for the sole purpose of purchasing twenty-three acres of vacant land from Cohan Lipp, LLC. Crabtree signed a contract agreeing to pay $3.1 million for the land, which would be developed and paid for in three phases. When an environmental survey showed that the land might contain some wetlands that could not be developed, Crabtree backed out of the deal. Lipp sued Crabtree for breach of contract, seeking specific performance. The court held that Lipp was entitled to specific performance of the land-sale contract.footstar.png

Contracts for Personal Services

“Controversy equalizes fools and wise men—and the fools know it.”

Oliver Wendell Holmes 1809–1894 (American author)

Contracts for personal services require one party to work personally for another party. Courts normally refuse to grant specific performance of personal-service contracts. One reason is that ordering a party to perform personal services against his or her will would amount to a type of involuntary servitude.footstar.png

Moreover, the courts do not want to monitor contracts for personal services, which usually require the exercise of personal judgment or talent.

Example 17.11

Nicole contracts with a surgeon to remove a tumor on her brain. If he refuses to perform the surgery, the court will not compel (nor would Nicole want) him to perform. A court cannot ensure meaningful performance in such a situation.footstar.png

If a contract is not deemed personal, the remedy at law of monetary damages may be adequate if a substantially identical service (for instance, lawn mowing) is available from other persons.

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