Specific Performance of Contracts and the Law: Understanding Section 10 of the Specific Relief Act, 1963
Specific Performance of Contracts entails enforcing the exact terms of an agreement, with Section 10 of the Specific Relief Act, 1963 playing a crucial role in determining when specific performance can be enforced by the court. The recent amendment in 2018 highlights the shift towards statutory remedy over equitable discretion in granting specific performance, emphasizing scenarios where damages are inadequate compensation or when monetary relief is not enough. Understanding the nuances of specific performance and contract enforcement is essential for legal clarity.
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Law On Specific Performance Of Contract Chapter II
LAW ON SPECIFIC PERFORMANCE OF CONTRACT Sections 9-25 deal with specific performance of contracts: Basic rules. A contract is an agreement upon sufficient consideration to do or not to do a particular act. The party on whom this contractual obligation rests must not fails to discharge such obligation. In case of his failure, the other party will have a right sue for performance of the contract. This is called Specific Performance . The Specific Relief (Amendment) Act, 2018, makes the relief for specific performance a statutory remedy instead of an equitable discretionary remedy. Before the Amendment, courts grant specific performance when they perceive that damages will be inadequate compensation. Earlier, Specific performance is deemed an extraordinary remedy, awarded at the court s discretion. The Amendment Act, 2018 has dispensed with the settled grounds that specific performance can only be granted when either the damage cannot be ascertained or when monetary compensation is not adequate.
Specific Performance of Contracts Specific performance means enforcement of exact terms of the contract. Under it the plaintiff claims for the specific thing of which he is entitled as per the terms of contract. For example, if A agrees to sell certain shares to B of a specific company which are limited in number and after the payment made by B, if A refuses to sell the shares then B is entitled to recovery of those shares
Section 10 of the Specific Relief Act, 1963 substituted by Section 10 introduced by Specific Relief (Amendment) Act, 2018 Section 10 of Specific Relief Act, 1963 Cases in which specific performance of contract enforceable Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced (a) when there exists no standard for ascertaining actual damage caused by the non- performance of the act agreed to be done; or
Section 10 of the Specific Relief Act, 1963 substituted by Section 10 introduced by Specific Relief (Amendment) Act, 2018 Section 10 of Specific Relief Act, 1963 (b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief. Explanation Unless and until the contrary is proved, the court shall presume (i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and (ii) that the breach of a contract to transfer movable property can be so relieved except in the following cases: (a) where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market; (b) where the property is held by the defendant as the agent or trustee of the plaintiff.
Section 10 of the Specific Relief (Amendment) Act, 2018 Substitution of new section for section 10: For section 10 of the principal Act, the following section shall be substituted, namely: Specific performance in respect of contracts: The specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of section 11, section 14 and section 16 The Courts no longer have the discretion and must grant specific performance unless expressly barred by the provisions stated in the Specific Relief Act, 1963 ( Act ) i.e. Sections 11(2), 14 and16.
Contracts which cannot be specifically enforced According to Section 14 (OLD) of Specific Relief Act 1963, there are certain contracts which cannot be specifically enforced and these are: Where compensation in money is an adequate relief: Here the court will not order specific performance of contract as it is expected that the plaintiff will bank upon the normal remedy for breach of contract i.e. remedy of compensation. For example contract of contract of sale of goods ,contract of repair of premises etc.
Old Section 14 Where a contract runs into minutes or numerous detail: These contracts includes contract which depends upon the personal qualification or the violation of the parties or is of such nature that the court cannot enforce specific performance of its material terms. In Robinson Davison, (1871) L.R. Ex. 269 it was held by the court that the contract to perform in concert depends upon the personal kill of defendant s wife, and the contract cannot be specifically enforced due to her illness. The other example is construction contract where the detailed terms of contract are not explained.
Old Section 14 Contracts of determinable nature: Determinable contract means a contract which can be determined or revoked or put to an end by a party to the contract. For example in case of partnership at will any partner can retire by giving notice in writing to other partners and can dissolve the firm. Contracts which involve the performance of continuous duty which court cannot supervise: Earlier under Specific Relief act, 1877 the continuous duty which court cannot supervise is considered over a period of 3 years which was omitted under Specific Relief Act, 1963 and no time limit restricted for the performance of a continuous duty. These include contract of appointment of employees for continuous service or contract to execute sale deed every year. In Central Bank v. Vyankatesh, A.I.R. 1949 Nag 286, the defendant was required to execute deed every year for the period of 25 years and contract is held to be specifically unenforceable. Contract of arbitration: According to Section 14(2), a contract to refer present or future differences to arbitration shall not be specifically enforceable.
Section 14 of the Specific Relief (Amendment) Act, 2018 Substitution of new section for section 10: For section 14 of the principal Act, the following section shall be substituted, namely: Contracts not specifically enforceable: The following contracts cannot be specifically enforced, namely: (a) where a party to the contract has obtained substituted performance of contract in accordance with the provisions of section 20; (b) a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise; (c) a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms; and (d) a contract which is in its nature determinable.
Section 14 of the Specific Relief (Amendment) Act, 2018 As per Section 14 (NEW)of the Amendment Act, 2018 the following categories of contracts cannot be specifically enforced: 1. where a party to the contract has obtained substituted performance accordance with the provisions of section 20- Section 14 (a) of contract in
Section 20 of the Specific Relief (Amendment) Act, 2018 Substituted performance of contract (1) Without prejudice to the generality of the provisions contained in the Indian Contract Act, 1872, and, except as otherwise agreed upon by the parties, where the contract is broken due to non-performance of promise by any party, the party who suffers by such breach shall have the option of substituted performance through a third party or by his own agency, and, recover the expenses and other costs actually incurred, spent or suffered by him, from the party committing such breach.
Section 20 of the Specific Relief (Amendment) Act, 2018 Cont.. Substituted performance of contract: (2) No substituted performance of contract under sub- section (1) shall be undertaken unless the party who suffers such breach has given a notice in writing, of not less than thirty days, to the party in breach calling upon him to perform the contract within such time as specified in the notice, and on his refusal or failure to do so, he may get the same performed by a third party or by his own agency: Provided that the party who suffers such breach shall not be entitled to recover the expenses and costs under sub-section
Section 20 of the Specific Relief (Amendment) Act, 2018 (1) unless he has got the contract performed through a third party or by his own agency. (3) Where the party suffering breach of contract has got the contract performed through a third party or by his own agency after giving notice under sub- section (1), he shall not be entitled to claim relief of specific performance against the party in breach. (4) Nothing in this section shall prevent the party who has suffered breach of contract from claiming compensation from the party in breach.
Section 14 of the Specific Relief (Amendment) Act, 2018 2. a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise - Section 14(b) [Example: Contract to build or Repair] Joseph versus National Magazine Co Ltd. (1958) 3 ALL ER 52 A writer refused to have his name published as the author which had been re-edited and altered by a magazine expressing other opinions in a different style. He was not entitled to specific performance of his contract as that would require supervision by the court of editing the article though he would be entitled to damages for loss of opportunity of enhancing his reputation.
Section 14 of the Specific Relief (Amendment) Act, 2018 Cont.. 2. a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise - Section 14(b) Example:- A contracts to let for 21 years to B the right to use such part of a certain railway made by A as was upon B s land and that B should have a right running carriages over the whole line on certain terms and might require A to supply the necessary engine power and that A should during the term keep the whole railway in good repair specific performance of this contract must be refused to B .
Section 14 of the Specific Relief (Amendment) Act, 2018 3. a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms;- Section 14(c) Contracts of employment, contracts of personal service, contracts involving performance of artistic skill like contract to sing, act, contract of authorship. It is beyond the capacity of judicial process to enforce actual performance. Example: Where A contracts to render personal service to B or contracts to employ B on personal service or being an author contracts with B , a publisher to complete a literary work, B cannot enforce specific performance to these contracts.
Section 14 of the Specific Relief (Amendment) Act, 2018 Cont.. 3. a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms; and Example: The principle applies equally where the employer seeks to enforce the contract. Even if a person has contracted with another to perform a service and there is consideration for such service in the shape of liquidation of debt or even remuneration he cannot be forced by compulsion of law to continue to perform such service as that would be forced labour within inhibition of Article 23 of the Constitution of India.
Section 14 of the Specific Relief (Amendment) Act, 2018 forcing someone to perform a personal service contract "would be but a mitigated form of slavery, in which the party would have lost the right to dispose of himself as a free agent, and be ... subject to the control of another. Our political system prefers not to interfere in the lives of its citizenry in such a manner as to inhibit personal liberty, so forced contract performance is avoided whenever possible.
Section 14 of the Specific Relief (Amendment) Act, 2018 ("How do you make an opera singer sing her best? You don't."). A contract to sing at B s theatre for one year and not to sing elsewhere. To sing at B s theatre for one year is a contract which depends upon the personal qualifications or volition of the parties and hence cannot be specifically enforced. But the negative part of this contract that A will not sing elsewere can be specifically enforced.
Section 14 of the Specific Relief (Amendment) Act, 2018 4. a contract which is in its nature determinable. (Determinable Contracts)- Section 14 (d) Example: Where A and B contract to become partners in a certain business the contract not specifying the duration partnership, the contract cannot be specifically performed for if it were so performed either A or B might at once dissolve the partnership. of the proposed
