12.2 Limitations and Defenses to Specific Performance

Specific performance is a powerful remedy, but it comes with limitations. Courts consider factors like undue hardship, insolvency, and the nature of personal service contracts when deciding whether to grant it. Balancing the interests of both parties is crucial.

Judges have discretion in awarding specific performance, weighing the adequacy of monetary damages, uniqueness of the subject matter, and feasibility of enforcement. This equitable approach ensures fairness while avoiding unjust enrichment or excessive burdens on either party.

Limitations and Defenses to Specific Performance

Undue hardship in specific performance

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• Courts aim to avoid imposing unreasonable burdens on the defendant ensures fairness and equity for both parties
• Factors courts consider in determining undue hardship:
  • Difficulty or expense of performance for the defendant (obtaining rare materials, complex construction)
  • Disproportionate cost compared to the benefit to the plaintiff (excessive expenses, minimal gain)
  • Changed circumstances making performance more burdensome (unexpected market shifts, natural disasters)
• Significant increase in cost of materials or labor (steel prices, skilled workforce shortage) can constitute undue hardship
• Unforeseen obstacles or complications in performance (regulatory changes, supply chain disruptions) may be considered
• Severe financial strain on the defendant (bankruptcy, liquidity issues) can be a valid defense

Impact of defendant's insolvency

• Defendant's inability to pay debts as they become due can affect the availability of specific performance
• Courts may be reluctant to grant specific performance if the defendant is insolvent due to:
  • Inability to comply with the court's order (lack of financial resources)
  • Increased risk of non-performance or delayed performance (defaulting on obligations)
  • Potential unfairness to other creditors (preferential treatment, limited assets)
• Monetary damages, if available, may be preferred in cases of insolvency allows for equitable distribution among creditors

Limitations for personal service contracts

• Contracts involving unique or specialized skills, talents, or expertise (artists, athletes, consultants) are generally not subject to specific performance
• Reasons for denying specific performance in personal service contracts:
  • Difficulty in enforcing and supervising performance (ensuring quality, monitoring compliance)
  • Potential for involuntary servitude or forced labor (coercion, violation of personal autonomy)
  • Concerns about the quality of performance under compulsion (lack of motivation, resentment)
• Courts may grant injunctive relief in limited circumstances:
  • Preventing the breaching party from performing elsewhere (non-compete agreements)
  • Enforcing negative covenants (confidentiality clauses, trade secret protection)

Court discretion and equity balancing

• Specific performance is an equitable remedy granted at the court's discretion not automatically available as a matter of right
• Factors influencing the court's decision to grant specific performance:
  • Adequacy of monetary damages (compensation, substitutability)
  • Uniqueness of the subject matter (rare artwork, real estate)
  • Feasibility of enforcing the order (clear terms, measurable performance)
  • Hardship or oppression to the defendant (undue burden, changed circumstances)
  • Conduct and fairness of the parties (good faith, clean hands)
• Balancing equities involves weighing the interests of both parties:
  1. Considering the relative burdens and benefits
  2. Ensuring a just and fair outcome
  3. Avoiding unjust enrichment or undue hardship