#14994 - Specific Remedies - Contract Law

Unlike damages, for specific remedies the primary obligation to perform is not converted into a secondary obligation to pay damages. Specific remedies require the defendant to perform his side of the bargain.

However, this traditional distinction may no longer hold true. McKendrick (2010) argues that the obligation that the defendant is ordered to perform generally differs in some way from the initial obligation that was undertaken in the contract:

• Most claimants do not seek specific performance until the defendant has already broken the contract. In such a case, the defendant obviously cannot perform exactly in accordance with the original contractual obligation in that, at the least, performance will take place at a different time from that originally agreed.

• The obligations imposed by specific performance are obligations imposed by the court, not the original contract, with different sanctions for non-compliance (criminal sanctions).

Specific remedies can be divided into those that place ‘positive’ duties on the defendant (he defendant is required to do something) and those that place ‘negative’ duties (a duty not to do something)

• The action for an agreed sum, specific performance and the mandatory injunction are in the first camp, with prohibitory injunctions in the second.

Burrows (2000) argues that we might expect that a claimant would always be able to obtain a specific remedy as an alternative to getting damages, because specific remedies more directly protect the claimant’s right to contractual performance. Further, specific performance will often be more favourable to a claimant, given the presence of doctrines like mitigation that limit the damages recoverable.

On the other hand, it is a greater intrusion upon one’s autonomy and freedom to order him to do something than it is to order you not to do something. Allowing the defendant to decide between performing and paying compensation is far less intrusive to a defendant than ordering him to perform his side of the bargain.

Beatson (2010) specific remedies should be awarded less frequently as it avoids the policy of the mitigation rule and that the courts are increasingly willing to award appropriate levels of compensation for a breach of contract.

A claimant who seeks a specific remedy is not merely asking the court to declare that the defendant is obliged to do something under the contract. He is asking for the court to order that the defendant do something, and back this order with the threat of criminal sanctions. The claimant and defendant never agreed that such an order should be made in event of breach, so the court has a choice as to whether to grant it or not.

Sum awarded under an action for an agreed sum is “liquidated” (already determined). There is no need to consider remoteness of damage or mitigation.

So where the contract is discharged (for repudiatory breach) before the obligation to pay the agreed sum falls due, only damages can be claimed.

2. In theory, the innocent party can opt to “reject” repudiatory breach, perform and claim the price in an action for an agreed sum.

White & Carter (Councils) Ltd v McGregor [1962] AC 413

But remember there are two “exceptions” which might scupper the innocent party in practice ie must show these 2 to take advantage of the “debt rule”

1. Innocent party has “no legitimate interest” in performance; or

Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith) [2012] EWHC 1077 (Comm) -> Cooke J “an innocent party will have no legitimate interesting maintaining the contract if damages are an adequate remedy and his insistence on maintaining the contract can be described as “wholly unreasonable”, “extremely unreasonable” or perhaps in my words, “perverse” at [49]

2. Innocent party needs the co-operation of other party to perform his obligations

Is it just, in all the circumstances, that a claimant should be confined to his remedy in damages?

Damages may be an inadequate remedy because the claimant is unable to obtain a substitute for the promised performance. For example:

(i) Sale of land

• But what about an investor? Damages would be a perfectly adequate remedy - Southcott Estates Inc v Toronto Catholic District School Board 2012 SCC 51 (land not necessarily specially enforceable)

(ii) Sale of unique chattel, like a painting

• See also section 52 Sale of Goods Act 1979

• Even in the case of generic goods, like petrol, specific performance may be ordered where such goods cannot be obtained other than from the defendant (e.g. where there is an oil crisis, as in Sky Petroleum Ltd v VIP Petroleum Ltd [1974] – Goulding J recognised the exceptional market conditions oil crisis, issued interim injunction to prevent D breaching, equivalent of specific performance though not strictly specific performance, to compel the oil supplier to deliver petrol to the retailer)

• Interim injunction to stop D cancelling (awarded in this case) = compelling D to perform ie specific performance

• Cf Societe des Industries Metallurgiques SA v Bronx Engineering (1975) where damages adequate when alternative manufacturer supplied machinery would take almost a year to arrive

(iii) Where damages would only be nominal (Beswick v Beswick [1968])

• Contrast cases where damages are “inadequate” because they are impossible to quantify or because English law does not protect the expectation interest as fully as it might.

The reason for this bar is that it is thought to be inappropriate to try to force unwilling parties into a personal relationship. In the context of employment, there is a statutory bar preventing an employee being compelled to perform a contract of employment (s236 Trade Union and Labour Relations (Consolidation) Act 1992).

But increasingly exceptions have been recognised: e.g. Hill v CA Parsons Ltd [1972] Ch 305 (Union pressure, actually about injunction not specific performance. Employer D, agreed with Union that require employees to join the Union. C didn’t want to join the Union but wanted to carry on working. D sacked C in breach of contract. After sacked, legislation came in force that would make made his sacking unlawful) -> gave injunction that as like specific performance

See Lord Wilson in Societe Generale, London Branch v Geys [2012] UKSC 63 who declined on this appeal to consider the:

“big question whether nowadays the more impersonal, less hierarchical, relationship of many employers with their employees requires review of the usual unavailability of specific performance…”

• Ie maybe might compel someone to specific performance for employment contracts

Nonetheless the norm remains that specific performance will be denied.

The court will not enforce a contract if this will require the constant supervision of the court to ensure that the order is complied with (contempt of court).

In Cooperative Insurance v Argyll Stores [1997], the defendants, Argyll (anchor tenant), decided to close down a supermarket in breach of contract. This action breached a clause in the lease requiring Argyll to keep the premises open, so the claimant landlord sought specific performance to keep D’s store’s open. HL refused to award specific performance.

• Held clause was insufficiently precise

• Narrow shows that specific performance not available to compel a tenant to hour a long-running covenant to “keep open” a business

• First, keeping the supermarket open would cause massive losses to the defendant.

• Second, the obligation in question was insufficiently precise. If specific performance of such an obligation were granted, this would increase the likelihood of wasteful litigation over compliance and the oppression caused by having to run a business under the threat of contempt proceedings for breach of that order.

• Third, the court would have to supervise and police the order for 20 years

• Ie problem of constant supervision – Lord Hoffmann latched on to this point and emphasised it

  • Lord Hoffmann drew a distinction between “orders which require a defendant to carry on an activity, such as running a business over a more or less...