SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT ACT: IMPORTANT 14 POINTS

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SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT ACT: IMPORTANT 14

POINTS

 

1. Specific performance refers to fulfilling of contract as agreed by both parties.

2. Any party who has suffered a loss because of a breach of contract or non-performance of a contract on part of another party can file a suit for specific performance.

3. Equity courts provide the relief of specific performance which was affected because of non-performance of a contract as agreed. The court does not consider this as a right of the plaintiff but an alternative to awarding damages. The court provides a specific performance order at its discretion.

4. Section 16(c) of the Specific Relief Act puts the burden on the plaintiff to prove that he had performed his part or will perform as agreed by both parties in the contract. This clause emphasizes the ‘readiness and willing’ of the plaintiff and is the most important part of suing for specific performance. In simple words, the person seeking specific performance from the court must prove the court that he has performed or will perform his part as agreed in the contract.

5. In India, most suits of specific performance are associated with the sale of immovable assets and transferring shares.

6. When a party files suit of specific performance, they must approach the court being guiltless and from the start of hearing till the judgment must be ready to prove they had performed or will perform their part of the contract. The court takes into consideration the conduct of the plaintiff before and after filing a suit.

7. In the sale of immovable assets, the court does not consider time as an essence of the contract.

8. Suit for specific performance of the contract has to be filed within a reasonable time and depends upon facts and circumstances of the case. If the parties intend to exclude the remedy, they can do so by mentioning it to the court and in such case, the court will provide liquidated damages as mentioned in the contract.

9. Section 19 of the Specific Relief Act specifies that specific performances of a contract can be enforced against either party or any person claiming the same.

The Court grants specific performance in the following situations:

a. If there is no standard to determine the compensation to be awarded i.e. where it is impossible to fix compensation due to non-performances of contract. In such cases, the court directs the defendant to perform his part as agreed by both parties during the making of a contract.

b. The court awards relief for specific performance when there is no exact substitute or alternative to the subject of matter of the contract.

c. The court awards relief of specific performance in case of contracts related to land, buildings, rare articles, unique goods whose value cannot be easily determined as they have a special value for the plaintiff.

10. In all the above contracts, monetary compensation is not enough as the party suffering the loss cannot get an exact substitute in the market.

11. It is at the sole discretion of the court to award remedy of specific performance.

12. There are some circumstances when granting specific performance is impossible:

a.The contract is too vague to be enforced.

b. When the element of consensus-ad-idem is missing from the contract.

c. The contract was made with no consideration.

d. The contract is void or unenforceable in the court of law.

13. The Supreme Court of India has listed the following requirements to be met in a specific performance suit:

a. Whether a valid, concluded and an enforceable contract exists between both parties.

b. Whether the plaintiff has performed or is ready to perform his part as agreed in the contract.

c. How and to what extent the plaintiff has performed his part of the contract and whether it is under the terms and conditions of the contract.

d. Whether it is fair to grant the relief of specific performance or it will cause any hardship to the defendant.

e. Whether the plaintiff is entitled to the grant of any alternate relief. If so, on what grounds.

14. There are lots of ongoing debates in the legal society regarding the desirability of specific performance as it is costly to administer and may deter parties from engaging in efficient breach.

 

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