Specific performance is an action to compel a party who breached a contract to perform the contract as promised. The subject matter of the contract must be unique, or an action for damages would be the proper remedy. Actions for specific performance are usually allowed with regard to a contract involving the sale of particular real estate; and a contract for sale of a particular business. Specific performance is not allowed regarding a contract for the sale of personal property unless the property is unique in some way like an antique, coin collection, or art objects.
Generally, a party cannot obtain specific performance of personal service contracts or employment contracts. This is because of the Thirteenth Amendment barring involuntary servitude. However, breach of a service or employment contract can subject the breaching party to a suit for damages.
In general, a contract may limit the remedies that a non-breaching party may obtain. For example, Johnston purchases a new truck from Acme Truck Sales. The contract may limit Johnston’s remedies to having Acme repair the truck or replace the truck if it is defective.
A contract may state the amount of liquidated damages to be paid if the contract is breached. Upon a party’s breach, the other party will recover this amount of damages whether actual damages are more or less than the liquidated amount. For example, the parties to a construction contract may stipulate that damages are to be paid of $1,000.00 for each day that the construction exceeds its contracted completion date. Another example would be with regard to a contract for the sale of land where the contract provides that the earnest money paid will be the sole remedy upon breach of contract by the buyer.
Courts will honor liquidated damage provisions if:
- Actual damages are hard to determine (e.g., breach of a restrictive covenant).
- The amount is not excessive when compared with probable damages.
If the agreed-upon liquidated damage amount is unreasonable, the Court will hold the liquidated damage clause to be void as a penalty. In such situations, the plaintiff would have to prove the actual damages.