Specific performance is an equitable remedy in contract law that is somewhat rare, and most often applied in real property contractual disputes. But, because the remedy is used when the goods identified in a contract are unique, we sometimes see it where performance includes works of art, rare cars, or custom-made products. In these situations, a court will order a party to perform a specific action that they agreed to perform in the contract. The court may order the buyer or the seller to perform, whichever party breached the contract. The most common example of specific performance is where a court will order the reluctant buyer (or seller) to complete the sale of the property, instead of awarding monetary damages.

Keep in mind that specific performance is not a common legal remedy, because courts are reluctant to force someone to do something they do not want to do. Therefore, if the court does order specific performance in Tennessee, there is usually a good reason.

Specific Performance: Overview

The remedy of specific performance has its origins in medieval common law, where ownership of property was extremely important to one’s place in society. During that time (and even today in some cases), the Courts often found that an award of monetary damages did not fairly compensate the party who had performed their part of an agreement. 

Because there was no fair and equitable award of money to the non-breaching party, courts would grant specific performance. Specific performance was based primarily on the idea that land is unique and irreplaceable, so the doctrine has survived and remained valid even in modern contract laws.

The Tennessee Code states that “Specific performance may be decreed where the goods are unique or in other proper circumstances.” However, no party in Tennessee is entitled to specific performance; rather, whether specific performance is appropriate is within the discretion of the courts. In making this decision, the courts have held that equitable relief will not be granted if, under the circumstances of the case, the result of the specific enforcement of the contract would be harsh, inequitable, oppressive, or result in an unconscionable advantage to the plaintiff, even though the complainant has no intention of taking an unfair advantage, and even though the contract may be valid and enforceable at law.

So, this type of remedy is based (as much as possible) on what is fair to both parties affected by the contract breach.

When Can Buyers Sue for Specific Performance?

In any real estate contract, there are at least two parties who have agreed to perform their obligations under the contract – namely one to transfer property in exchange for money, and one to transfer money in exchange for property. After the agreement is made, a seller may wish to terminate the agreement, or otherwise back out of the contract. If the seller is terminating for a reason not allowed by the terms of the contract, such as to get a better deal or just due to a change of heart, the buyer may pursue specific performance, seeking a court order requiring the seller to perform as they originally agreed to do.

Of course, in order for specific performance to be ordered, the buyer will need to show the court that they are ready and able to uphold their part of the contract.

When Can Sellers Sue for Specific Performance?

Sellers can also sue for specific performance for a buyer breach of contract, an award of specific performance to a seller is much rarer. The reason for this is that most real estate contracts include specific terms for damages in the event of buyer breach, including that the seller keeps any earnest or “good faith” money paid by the buyer. Importantly, where a buyer breaches the terms of a contract, the seller can simply relist and sell the property to someone else. Therefore, a monetary remedy will usually adequately compensate a seller for the loss of time.

Some real estate transactions involve the exchange of two pieces of property, rather than payment of money. In that case, specific performance may be ordered by the court because the seller was also expecting to receive unique property as a result of the transaction. because the seller would have enjoyed that unique property instead of money, an award of money may not be sufficient to cure the damage.

Talk to an Attorney About Your Breach of Contract Case

If your contract was breached, the first step in seeking specific performance is to carefully evaluate the terms of the underlying contract. Questions you should ask are:

• What were the obligations of both parties?

• Did the breaching party actually terminate the contract in good faith or under a provision allowing them to do so?

• Was the subject of the contract unique or was the breach something that money is sufficient to fix?

• Is the injured party ready to perform or already performing under the contract?

• What were the circumstances under which the breach occurred?

• Would specific performance be harsh, inequitable, oppressive, or result in an unconscionable advantage to the injured party?

In any case, you should speak to an attorney who is experienced in real estate transactions. Unsurprisingly, most cases are settled out of court; however, if negotiation is not an option, you will need an advocate to litigate your case. We can help you resolve your issue, so you can get back to your business.

You should be able to count on your contracts being upheld, so book a consultation today to discuss your case.