Specific Performance of Contract Enforceable

 

Specific Performance of Contract Enforceable

 

Under the following conditions specific performance of the contract is enforceable (Section 10):
When there exists no standard for ascertaining actual damage:
It is the situation in which the plaintiff is unable to determine the amount of loss suffered by him. Where the damage caused by the breach of contract is ascertainable then the remedy of specific performance is not available to the plaintiff. For example, a person enters into a contract for the purchase of a painting of dead painter which is only one in the market and its value is unascertainable then he is entitled to the same.

When compensation of money is not adequate relief:
In following cases compensation of money would not provide adequate relief:

1. Where the subject matter of the contract is an immovable property.
2. Where the subject matter of the contract is movable property and,
3. Such property or goods are not an ordinary article of commerce i.e. which could be sold or purchased in the market.
4. The article is of special value or interest to the plaintiff.
5. The article is of such nature that is not easily available in the market.
6. The property or goods held by the defendant as an agent or trustee of the plaintiff.

In Case of Ram Karan v. Govind Lal, an agreement for sale of agricultural land was made & buyer had paid full sale consideration to the seller, but the seller refuses to execute sale deed as per the agreement. The buyer brought an action for the specific performance of contract and it was held by the court that the compensation of money would not afford adequate relief and seller was directed to execute sale deed in favour of buyer.

Similarly, it was held by the court where the part payment was paid by plaintiff and defendant admitted that he had handed over all documents of title of property to the plaintiff. Sale price in an agreement is not low and defendant had failed to establish that said document was only a loan transaction then the agreement is valid and defendant is liable to perform his part (M. Ramalingam v. V. Subramanyam).

Specific Performance Of Contracts Connected With Trusts Enforceable.[Section 13]

1. specific performance of a contract may, in the discretion of the court, be enforced when the act agreed to be done is in the performance wholly or partly of a trust.
2. A contract made by a trustee in excess of his powers or in breach of trust cannot be specifically enforced.

Section 11(2) in The Specific Relief Act, 1963

(2) A contract made by a trustee in excess of his powers or in breach of trust cannot be specifically enforced.

Specific Performance Of Part Of Contract.[ Section 14]

The court shall not direct the specific performance of a part of a contract.

1. Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed be a only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.
2. Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either:
1. forms a considerable part of the whole, though admitting of compensation in money; or
2. does not admit of compensation in money; he is not entitled to obtain a decree for specific performance; but the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party;
   
   
1. in a case falling under clause:
   
   
1. pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and, in a case, falling under clause
2. [pays or has paid] the consideration for the whole of the contract without any abatement; and
2. in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.
    
3. When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed the court may direct specific performance of the former part.

A party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter existing at the date of the contract has ceased to exist at the time of its performance.

Rights Of Purchaser Or Lessee Against Person With No Title Or Imperfect Title.[ Section 15]

1. Where a person contracts to sell or let certain immovable property having no title or only an imperfect title, the purchaser or lessee has the following rights, namely:
   
   
1. if the vendor or lessor has subsequently to the contract acquired any interest in the property, the purchaser or lessee may compel him to make good the contract out of such interest.
2. where the concurrence of other person is necessary for validating the title, and they are bound to concur at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such concurrence, and when a conveyance by other persons is necessary to validate the title and they are bound to convey at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such conveyance.
3. where the vendor professes to sell unencumbered property, but the property is mortgaged for an amount not exceeding the purchase money and the vendor has in fact only a right to redeem it, the purchaser may compel him to redeem the mortgage and to obtain a valid discharge, and, where necessary, also a conveyance from the mortgagee.
4. where the vendor or lessor sues for specific performance of the contract and the suit is dismissed on the ground of his want of title or imperfect title, the defendant has a right to a return of his deposit, if any, with interest thereon, to his costs of the suit, and to a lien for such deposit, interest and costs on the interest, if any, of the vendor or lesser in the property which is the subject-matter of the contract.

The provisions shall also apply, as far as may be, to contracts for the sale or hire of movable property.

Contracts Not Specifically Enforceable.[ Section 16]

1. The following contracts cannot be specifically enforced, namely:
   
   
1. a contract for the non-performance of which compensation in money is an adequate relief.
2. a contract which runs into such minute or numerous details or which is so dependent on the personal qualification or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms;
3. a contract which is in its nature determinable.
4. a contract the performance of which involves the performance of a continuous duty which the court cannot supervise.
    
2. No contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
    
3. The court may enforce specific performance in the following cases:
   
   
1. where the suit is for the enforcement of a contract,
   
   
1. to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once: or
2. to take up and pay for any debentures of a company.
    
2. where the suit is for,
   
   
1. the execution of a formal deed of partnership, the parties having commenced to carry on the business of the partnership; or
2. the purchase of a share of a partner in a firm;
    
3. where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land: Provided that the following conditions are fulfilled, namely:
   
   
1. the building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work;
2. the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and
3. the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.

Who Can Obtain Specific Performance [Section 17]

Section 17 of the Specific Relief Act, 1963 provides for those persons who can obtain specific performance of a contract. Those are as follows:

1. Any party to a suit.
2. Representative in interest or principal of any party thereto.
3. If a contract is a settlement of marriage or a compromise of doubtful rights between members of the same family, any beneficiary entitled thereunder.
4. If a tenant enters into a contract for life in due exercise of a power, the remainderman.
5. A reversioner in possession, if an agreement is a covenant entered into with his predecessor in title and the reversioner is entitled to the benefit of such covenant.
6. A reversioner in remainder, if an agreement is a covenant and the reversioner is entitled to the benefit and will sustain material injury if there is a breach of contract.
7. If a company has entered into an amalgamation with another company through a contract, the new company which arises out of such amalgamation.
8. If the promoters of a company entered into a contract before its incorporation for purposes of the company and such contract is warranted by the terms of the incorporation, the company provided that the company accepted the contract and communicated such acceptance to the other party of the contract.
    

Personal Bars To Relief.[ Section 18]

Specific performance of a contract cannot be enforced in favour of a person:

1. who would not be entitled to recover compensation for its breach; or
2. who has become incapable of performing, or
3. violates any essential term of the contract that on his part remains to be performed, or
4. acts in fraud of the contract, or
5. willfully acts at variance with, or
6. in subversion of the relation intended to be established by the contract; or
7. who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms of the performance of which has been prevented or waived by the defendant.
   
   
1. where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
2. the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.

Contract To Sell Or Let Property By One Who Has No Title, Not Specifically Enforceable.[ Section 19]

1. A contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor;
   
   
1. who, knowing himself not to have any title to the property, has contracted to sell or let the property;
2. who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt.
2. The provisions shall also apply, as far as may be, to contracts for the sale or hire of movable property.

Non-Enforcement Except With Variation.[ Section 20]

Where a plaintiff seeks specific performance of a contract in writing, to which the defendant sets up a variation, the plaintiff cannot obtain the performance sought, except with the variation so set up, in the following cases, namely:

1. whereby fraud,
2. mistake of fact or
3. misrepresentation,
4. the written contract of which performance is sought is in its terms or
5. effect different from what the parties agreed to, or
6. does not contain all the terms agreed to between the parties on the basis of which the defendant entered into the contact.
7. where the object of the parties was to produce a certain legal result which the contract as framed is not calculated to produce.
8. where the parties have, subsequently to the execution of the contract, varied its terms.

Relief Against Parties And Persons Claiming Under Them By Subsequent Title.[21]

Specific performance of a contract may be enforced against:

1. either party thereto.
2. any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract.
3. any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant.
4. when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation.
5. when the promoters of a company have, before its incorporation, entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company.

Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract

Conclusion
One of the important aspects of civil right is the fulfillment of the expectations created by a contract voluntarily made by the parties. Contract is not just an isolated transaction. It is often a link in a chain of several contracts. A failure at one place can cause a serious dislocation of economic social life. The contract must be enforced. The only way the law of contract can enforce a contract is by awarding compensation to the injured person or by specifically enforcing the obligations under the contract.

The most natural way of terminating the contract is to perform it. The performance may be either actual or attempted (also known as Tender). When a party offers to perform his promise in accordance with the contract, and the other party refuses to accept it, the contract is discharged. The tender to be valid must be unconditional, made at the proper time, place and manner, made to the promisee or his authorized agent, and must be for the whole obligation.

Performance can be demanded by the promisee only. In case of his death his representatives can demand performance. In case of contracts of a personal nature, they should be performed by the promisor. In other cases, it may be performed by his agent, and in case of his death by his legal representatives.

When two or more persons make a joint promise, then unless a contrary intention appears from the contract, all of them must perform jointly. If any one of the joint, promisors dies, his legal representative shall be liable to perform along with other joint promisors.

The contract should be performed at the time specified and at the place agreed upon. If no time is specified the promisor must perform the promise within a reasonable time. In case no time and place is fixed for the performance, the promisee must ask the promisor to fix the day and time for performance. In commercial agreements, time's the essence of the contract.
Promises which form the consideration or part of the consideration for each other are termed as reciprocal promises. Reciprocal promises must be performed in the order specified in the contract.

Assignment of a contract means transfer of rights and obligations under a contract to third party. It may be done by the act of the party or by operation of law. Rights and benefits under a contract can be duly assigned. But a promisor cannot assign his liabilities. Contracts of a personal nature cannot be assigned.

Appropriation means applying the payment to a particular debt. If, while making the payment, the debtor specifies the debt to which it should be applied, then the creditor must appropriate the payment to that debt only. In case the debtor does not specify the debt to which it should be applied, the amount can be appropriated by the creditor in the manner he deems it fit.

Specific performance is a form of equitable relief, given by the court in case of breach of contract, in the form of a judgment that the defendant does actually perform the contract according to the terms and stipulations.

The specific performance of any contract may, in the discretion of the court, be enforced:

1. When there exists no standard for ascertaining actual damage caused by the non-performance of the act agreed to be done; or
2. When the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.

Not all the contracts are specifically enforceable. These include the following:

1. A contract for non-performance of which compensation in money is an adequate relief.
2. A contract that runs into such minute details which is so dependent on the personal qualification or violation of the parties or otherwise its nature is such that the court cannot enforce specific performance of its material terms.
3. A contract which is by its nature terminable.
4. A contract, the performance of which involves a continuous duty, which the Court cannot supervise.

The plaintiff must be entitled to any legal character or to any right as to any property. The defendant should have denied or be interested in denying the character or title of the plaintiff. It is this denial which gives a cause of action for declaratory relief. And that the plaintiff is not in a position to claim further relief than mere declaration of his title, or where he is so able to seek further relief, he can seek such relief also.