Specific Performance: General Principles

• Author: Jeffrey Berryman
• Profession: Professor of Law. Faculty of Law University of Windsor
• Pages: 160-194

CHAPTER

10

SPECIFIC

PERFORMANCE:

GENERAL PRINCIPLES

A.

INTRODUCTION

Specific

performance

is an

equitable remedy that orders

a

defaulting

promisor

to

keep

her

contractual bargain under pain

of

contempt

of

court.

The

popular notion

is

that

it is a

presumptive remedy

in the

enforcement

of

realty contracts

and of a

secondary nature

in any

other

contract setting.

As we

will see, neither

of

these premises accurately

records

the

full

scope

of the

remedy.

Specific

performance

is a

remedy that

has

been shaped

by

historical

practice

and

many

of the

rules pertaining

to its

availability seem

strange today without some appreciation

of the

past development

of

the

remedy.

In

the

first

part

of

this

chapter

we

will

briefly

explore these

historical antecedents.

In

recent times there

has

been renewed interest

in

specific

performance

as a

remedy which most closely approximates

to

"complete" compensation

for

breach

of

contract

and

much

ink has

been expended reconciling equity's chosen contractual remedy with

the

compensatory goal

of

damages. These arguments will also

be

explored

in

this

chapter.

As

will emerge,

the

dominant arguments

inhibiting

specific

performance

are

concerns over

its

relationship with

the

common

law

remedy,

of

changes

and

perceptions about

the

inabil-

ity of

courts

to

undertake supervision

of

what

is

perceived

as

being

an

intrusive

and

coercive order.

As

with other equitable remedies, there

are

also

a

number

of

discretionary barriers

to the

granting

of

specific

performance

—

these will

be

discussed

in

chapter

11.

In

subsequent

160

Specific

Performance: General

Principles

161

chapters, specific performance will

be

looked

at in a

number

of

discrete

areas

of

contracting.

B.

A

BRIEF

HISTORY

OF THE

DEVELOPMENT

OF

SPECIFIC

PERFORMANCE

Where

a

promisor's obligations remain

unfulfilled

it

appears natural

for

the

promisee

to

seek specific performance.

In

that

way the

promisor

will

get

complete relief

for

that which

was

promised.

Why

then

has the

common

law

favoured

substitutionary

relief over specific performance?

To

answer

this

question,

one has to

appreciate

the

nature

of

contract-

ing

through

history.1

If one

were

to

take

a

look

at the

manner

of

con-

tracting

in the

sixteenth century

one

would make several observations.

• The

first

would

be the

variety

of

courts

in

which litigants could bring

an

action, which lead

to

much

forum

shopping: Chancery,

the Law

Merchant,

Admiralty Courts

and

Courts

of

Request

all

provided some

form

of

relief

for

parol

(oral) contracts. Indeed, most

of

these courts

had

superior process

for

handling parol contracts than

did the

com-

mon law

courts,

and as a

result proved very attractive

to

litigants.

Many

of

these courts were influenced

by

European approaches, prac-

ticed

by

merchants

and

traders throughout Europe

as

part

of the Law

Merchant,

and by the

workings

of the

earlier Ecclesiastical Courts,

from

where

the

chancellors were

often

drawn.

An

important tenet

of

the

Ecclesiastical Courts

was the

notion that

a

person

who had

failed

to

honour

his

promise imperiled

his

soul

before

God.

The

only

way to

remedy

this spiritual imbalance

was to

make

the

promisor observe

his

promise. This tenet

was

carried over

to

Chancery Courts

by

ecclesias-

tically-trained

chancellors.

In

common law, however,

the

main

form

of

contracting

was

through either

the

action

of

covenant, which

required specialty

(a

deed under

seal),

or the

action

of

debt,

by way of

penal

or

conditional bond.

A

promisor would create

an

obligation

by

entering

a

penal bond that

was

discharged

by

actually performing

the

promise

on the

stipulated date,

or by

forfeiting

the

penal bond.

It is in

these early roots than

one

sees emerging

the

idea

of a

monetary pay-

ment

as

being

a

substitution

for

actual performance.

1 See H.

Hazeltine, "Early History

of

Specific Performance

of

Contract

Law in

English

Law"

reproduced

in

Rechswissenschaftliche

beitragejuristischefestga.be

des

auslandes

ZuJosefKohlers (1909); A.W.B. Simpson, A History of the Common Law of Contract:

The

Rise

of

the

Action

ofAssumpsit

(Oxford:

Clarendon

Press,

1975);

and

P.S. Atiyah,

The

Rise

and

Fall

of

Freedom

of

Contract (Oxford:

Clarendon

Press,

1979).

162 THE LAW OF

EQUITABLE REMEDIES

•

Next,

one

would observe

the

total absence

of

suits based

on

execu-

tory

parol

contracts

in

common

law

courts.

It

would

be

another

200

years

before

the

common

law

finally developed

the

writ

of

assumpsit

(because

he

promised) which would elevate

the

promise

as

being

a

central tenet

of

contract law.

•

Third,

one

would note

the

importance

accorded realty,

and the

fact

that only

in

chancery (through

the

notion

of the

passing

of a

"use,"

or

benefit,

thus creating

a

proprietary interest held

by the

promisee),

would

a

purchaser

be

protected specifically against

a

vendor's

breach.

In

common law, title

to

land would only pass

on

convey-

ance,

which required

the

strict observance

of

particular formalities.

If

one

were

to

advance forward

and

view

a

snapshot

of

contracting

in

the

seventeeth century,

the

picture would appear quite similar.

For

contracts concerning realty, chancery courts played

a

decisive role

in

enforcement.

There were

two

reasons

for

explain this phenomenon.

•

First, realty carried with

it not

only

its

economic worth

but

also polit-

ical power

and

authority,

as

well

as

social

status.2

Thus,

a

conpensa-

tory

remedy, which merely substituted damages

for

actual perfor-

mance, would

not

result

in the

transfer

of

these ephemeral qualities.

• The

second reason

was the

subordination

of

contract

by

property

concepts. Chancery, which

had

created

the

passing

of a use to

denote

when

property

had

exchanged,

was

inextricably

tied

to

what Horow-

itz has

called

a

"title theory

of

exchange."3

Entrapped

in

this concep-

tual framework, chancery courts were slow

to

react

to the

nascent

ideas

of the

bilateral executory

contract4

that were about

to

emerge,

and

which became

so

important

in the

creation

of new

forms

of

property.

Realty

still formed

the

single most important

form

of

prop-

erty

that could

be

bargained,

and

this ensured

the

continued

impor-

2 See D.

Cohen, "The Relationship

of

Contractual Remedies

to

Political

and

Social

Status:

A

Preliminary Inquiry" (1982)

32

U.T.L.J.

31, who

points

out the

inextricable link between land ownership

and

political

enfranchisement

at the

time.

3 See

MJ.

Horwitz,

The

Transformation

of

American

Law,

1780-1860

(Cambridge:

Harvard

University Press, 1977). Central

to a

title theory

of

exchange

is the

notion

that

the

contract

is

being enforced because

it

alone

effects

an

exchange

of

ownership

in the

property, which

is the

subject

of the

contract.

The

simple

presence

of a

promise within

the

contract

is not the

reason

justifying

specific

enforcement.

In

this sense, equity mirrored

the old

common

law by

creating

a

proprietary

interest,

the

equitable interest,

and

ordered

its

conveyance.

4 A

bilateral executory contract

is a

contract

in

which

the

reciprocal exchange

of

promises between

two

parties

is the

immediate consideration

for

enforcement

without

the

need

for any

steps

of

actual performance having taken place.