RAJIV GANDHI NATIONAL

UNIVERSITY OF LAW, PATIALA

LAW OF CONTRACT
CONTRACTS WHICH MAY BE SPECIFICALLY
ENFORCED

SUBMITTED TO: SUBMITTED BY:

DR. MANPREET KAUR RENU
ASST. PROF. OF LAW ROLL NO.-18146
SECTION-C
GROUP NO.- 2
 ACKNOWLEDGEMENT

On completion of this project is my privilege to acknowledge my heartfelt

gratitude and indebtedness towards my teachers for their valuable suggestion and
constructive criticism. Their precious guidance and unrelenting support kept me on
the right path throughout the whole project and very much thankful to my teacher
incharge and project coordinators for giving me the relevant knowledgeable topic.

I wish to express my sincere gratitude to my teacher Dr. Manpreet Kaur for their
guidance and encouragement in carrying out this project work.

I also wish to express my thanks to my group members and my friends for their
ideas because of which this project became more captivating. I am also thankful to
my institution library a broad range of books to learn more.
 RAJIV GANDHI NATIONAL UNIVERSITY
OF LAW, PUNJAB
SUPERVISOR’S CERTIFICATE

DR. Manpreet Kaur Patiala, Punjab

Assistant Professor of Law Date: 15th March, 2019

Rajiv Gandhi National University of Law

Punjab

This is to certify that the Dissertation titled: Contracts Which Can Be Specifically
Enforced, submitted to Rajiv Gandhi National University of Law, Patiala in partial
fulfillment of the requirement of the B.A.LLB (Hons.). Course is an original and
bonafide research work carried out by Ms. Renu under my supervision and
guidance. No part of this project has been submitted to any university for the award
of any Degree or Diploma, whatsoever.

Dr. Manpreet Kaur

 TABLE OF CONTENT

Chapter-1
- Introduction
Chapter-2
- Contract
Chapter-3
- Breach of Contract
Chapter-4
- Remedies for Breach of Contract
Chapter-5
- Specific Relief Act, 1963
- Contracts which may be specifically enforced
- Contracts which cannot be specifically enforced
Chapter-6
- Exceptions to specific performance of contract
- Case Laws
Chapter-7
- Conclusion
 INTRODUCTON
Specific performance is equitable relief, given by the court to enforce against a defendant, the
duty of doing what he agreed by contract to do. Thus, the remedy of specific performance is in
contrast with the remedy by way of damages for breach of contract, which gives pecuniary
compensation for failure to carry out the terms of the contract 1. Damages and specific
performance are both, remedies available upon breach of obligations by a party to the contract;
the former is a ‘substitutional’ remedy, and the latter a ‘specific’ remedy. The remedy of specific
performance is granted by way of exception.

The plaintiff seeking this remedy must first satisfy the court that the normal remedy of damages
is inadequate, the presumption being that in cases of contracts for transfer of immovable
property, damages will not be adequate. Even in these cases specific performance is not always
granted, as it is a discretionary remedy.

The relief must be specifically claimed. When the plaintiff claims specific performance of a
particular agreement, the suit could be decreed for specific performance of only that agreement,
and not any other2.

The prescribed period of limitation for a suit of specific performance is three years from the date
fixed for performance, or, if no such date is fixed, when the plaintiff has noticed that
performance has been refused.

Specific performance is an equitable remedy in the law of contract, whereby a court issues an
order requiring a party to perform a specific act, such to complete performance of the contract. It
is typically available in the sale of land, but otherwise is not generally available if damages are
an appropriate alternative. Specific performance is almost never available for contracts of
personal service, although performance may also be ensured through the threat of proceedings
for contempt of court.

1
http://www.legalservicesindia.com/article/942/Specific-performance-of-Contracts.html
2
https://blog.ipleaders.in/when-specific-performance-of-contract-is-enforceable/
 CONTRACT

A contract is basically an agreement between two parties creating a legal obligation for both of
them to perform specific acts3. Each party is legally bound to perform the specified duties such
as rendering a payment or delivering goods.

In order for the contract to be enforceable, each party must exchange something of value (called
“consideration”).

A contract may be used for various transactions, including the sale of land or goods, or the
provision of services. They may be either oral or written, though courts prefer that agreements be
put in writing.

What are the Requirements for a Valid Contract?

In order for an agreement to be binding in a court of law, a contract must contain the following
elements4:

Mutual Assent: Each party must have a shared understanding regarding what the subject
matter of the contract is. For example, for a delivery contract, both parties must understand that
the word “ship” does not refer to a sea vessel, but rather means “to deliver”.

Offer and Acceptance: One party must make an offer by clearly communicating their
intent to be bound in a contract. Likewise, the other party must render their acceptance in
unambiguous terms.

Consideration: This where both parties mutually exchange something of value in order to
make the agreement binding. The consideration may simply be a formality, such as giving $1.
Sometimes contracts can be enforced in a one-sided promise where only one party renders
consideration.

3
https://www.legalmatch.com/law-library/article/what-is-a-contract.html
4
https://www.toppr.com/guides/business-laws/indian-contract-act-1872-part-i/essentials-of-a-contract/
 BREACH OF CONTRACT

A contract is a written or spoken promise, or series of promises, between two parties. Each party
to a contract promises to perform a certain duty or pay a certain amount 5. The agreement is
meant to be legally enforceable, so that each party will have legal recourse if the agreement isn’t
kept.

A breach of contract occurs when the agreement is not kept, because one party to the contract
does not fulfill their obligation according to its terms.

A breach can occur if a party fails to perform within the time frame specified in the contract,
does not perform in accordance with the terms of the agreement, or fails to perform whatsoever.

If one party fails to perform while the other party fulfills her duties under the contract, the
performing party is entitled to legal remedies for breach of contract.

OR
When any party to a contract, whether oral or written, fails to perform any of the contract’s
terms, they may be found in breach of contract 6. While there are many ways to breach a contract,
common failures include failure to deliver goods or services, failure to fully complete the job,
failure to pay on time, or providing inferior goods or services. In other words, a breach of
contract is a broken promise to do or provide something.

5
https://www.legalmatch.com/law-library/article/breach-of-contract.html
6
https://legaldictionary.net/breach-of-contract/
 REMEDIES FOR BREACH OF
CONTRACT

Parties to a contract are obliged to perform their respective promises. But situation arises where
one of the parties to a contract may break the contract by refusing to perform his promise. This is
what is called breach of contract. When one party commits breach of contract, soon the other
party is entitled to the following remedies.

Compensatory Damages-
A compensatory damages is money awarded to a plaintiff to compensate for
damages, injury, or another incurred loss. Compensatory damages are awarded in
civil court cases where loss has occurred as a result of the negligence or unlawful
conduct of another party7. To receive compensatory damages, the plaintiff has to
prove that a loss occurred, and that it was attributable to the defendant. The
plaintiff must also be able to quantify the amount of loss in the eyes of the jury or
judge.

Restitution-
Restitution, also known as Restitutionary damages, is a type of remedy available in many civil
lawsuits and in some criminal cases8. This type of remedy is calculated based on the gains of the
defendant, rather than the plaintiff’s losses. Restitution basically requires a defendant to forfeit
gains that they have unlawfully obtained to the plaintiff. In contracts law, restitution is used the
most. Restitution in contracts law is designed to restore the injured party or the party who
suffered damages, to the position they were before the formation of the contract. Parties that
want restitution cannot seek lost profits or earnings caused by the breach.

7
https://www.investopedia.com/terms/c/compensatory-damages.asp
8
https://www.legalmatch.com/law-library/article/what-is-restitution.html
Punitive Damages-
Punitive damages are legal recompense that is levied as punishment for a wrong or offense
committed by the payor9. Punitive damages are awarded by a court of law in a lawsuit. They are
often required in order to make up for a perceived shortfall in compensatory damages and are
merely intended to indemnify the plaintiff.

Specific Performance-
Specific performance is a specialized remedy used by courts when no other remedy (such as
money) will adequately compensate the other party. If a legal remedy will put the injured party
in the position he or she would have enjoyed had the contract been fully performed, then the
court will use that option instead10. The most common reason courts grant specific performance
is that the subject of the contract is unique, when it's not merely a matter of money or where the
true amount of damages is unclear. When a contract is for the sale of a unique property, for
instance, mere money damages may not remedy the purchaser's situation.

9
https://www.investopedia.com/terms/p/punitive-damages.asp
10
https://smallbusiness.findlaw.com/business-contracts-forms/what-is-specific-performance-as-a-legal-
remedy.html
 SPECIFIC RELIEF ACT, 1963

The Law of Specific Relief in India was originally codified by Specific Relief Act, 1877. The
provision of this enactment was considered by the Law Commission in its Ninth Report which
was later replaced by the present act of 1963. The Specific Relief Act, 1963 deals with the
remedies granted at the discretion of the court for the enforcement of individual civil rights. In
case of breach of contract, the general remedy available to the aggrieved party is compensation
or damages of loss suffered. For this, a civil suit is filed against the guilty party who had made
the default in performance of its duty or obligation as per the terms of contract under the
statutory provision of Section 73-75 of Indian Contract Act 1872. However, sometimes
pecuniary compensation does not satisfy the plaintiff so he may ask for specific relief.

Contracts which may be specifically enforced-

According to Section 10 of Specific Relief Act 1963 in the following conditions specific
performance of the contract is enforceable11:

When there exist no standard for ascertaining actual damage : It is the

situation in which the plaintiff is unable to determine the amount of loss suffered by him. Where
the damage caused by the breach of contract is ascertainable then the remedy of specific
performance is not available to the plaintiff. For example, a person enters into a contract for the
purchase of a painting of dead painter which is only one in the market and its value is
unascertainable then he is entitled to the same.

When compensation of money is not adequate relief: In following cases

compensation of money would not provide adequate relief:

- Where the subject matter of the contract is an immovable property.

- Where the subject matter of the contract is movable property and,
- Such property or goods are not an ordinary article of commerce i.e. which could be sold
or purchased in the market.
- The article is of special value or interest to the plaintiff.
- The article is of such nature that is not easily available in the market.
- The property or goods held by the defendant as an agent or trustee of the plaintiff.

11
https://blog.ipleaders.in/when-specific-performance-of-contract-is-enforceable/
Section 11-
11. Cases in which specific performance of contracts connected with trusts enforceable.12—

(1) Except as otherwise provided in this Act, specific performance of a contract may, in the
discretion of the court, be enforced when the act agreed to be done is in the performance wholly
or partly of a trust.

(2) A contract made by a trustee in excess of his powers or in breach of trust cannot be
specifically enforced.

Section 12
12. Specific performance of part of contract13.—

(1) Except as otherwise hereinafter provided in this section the court shall not direct the specific
performance of a part of a contract.

(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which
must be left unperformed by only a small proportion to the whole in value and admits of
compensation in money, the court may, at the suit of either party, direct the specific performance
of so much of the contract as can be performed, and award compensation in money for the
deficiency.

(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which
must be left unperformed either—

(a) forms a considerable part of the whole, though admitting of compensation in money; or

(b) does not admit of compensation in money, he is not entitled to obtain a decree for specific
performance; but the court may, at the suit of other party, direct the party in default to perform
specifically so much of his part of the contract as he can perform, if the other party—

(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of
the contract reduced by the consideration for the part which must be left unperformed and a case
falling under clause (b), 1[pays or had paid] the consideration for the whole of the contract
without any abatement; and

12
https://indiankanoon.org/doc/284699/
13
https://indiankanoon.org/doc/586382/
(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract
and all right to compensation, either for the deficiency or for the loss or damage sustained by him
through the default of the defendant.

(4) When a part of a contract which, taken by itself, can and ought to be specifically performed,
stands on a separate and independent footing from another part of the same contract which
cannot or ought not to be specifically performed, the court may direct specific performance of
the former part. Explanation.— For the purposes of this section, a party to a contract shall be
deemed to be unable to perform the whole of his part of it if a portion of its subject matter
existing at the date of the contract has ceased to exist at the time of its performance.

Section 13-
13. Rights of purchaser or lessee against person with no title or imperfect title14.—

(1) Where a person contracts to sell or let certain immovable property having no title or only an
imperfect title, the purchaser or lessee (subject to the other provisions of this Chapter), has the
following rights, namely:—

(a) if the vendor or lessor has subsequently to the contract acquired any interest in the property,
the purchaser or lessee may compel him to make good the contract out of such interest;

(b) where the concurrence of other person is necessary for validating the title, and they are
bound to concur at the request of the vendor or lessor, the purchaser or lessee may compel him to
procure such concurrence, and when a conveyance by other persons is necessary to validate the
title and they are bound to convey at the request of the vendor or lessor, the purchaser or lessee
may compel him to procure such conveyance;

(c) where the vendor professes to sell unencumbered property, but the property is mortgaged for
an amount not exceeding the purchase money and the vendor has in fact only a right to redeem it,
the purchaser may compel him to redeem the mortgage and to obtain a valid discharge, and,
where necessary, also a conveyance from the mortgagee; (d) where the vendor or lessor sues for
specific performance of the contract and the suit is dismissed on the ground of his want of title or
imperfect title, the defendant has a right to a return of his deposit, if any, with interest thereon, to
his costs of the suit, and to a lien for such deposit, interest and costs on the interest, if any, of the
vendor or lesser in the property which is the subject-matter of the contract. (2) The provisions of
sub-section (1) shall also apply, as far as may be, to contracts for the sale or hire of movable
property.

14
https://indiacode.nic.in/handle/123456789/1583?view_type=browse&sam_handle=123456789/1362
Section 20-
20. Discretion as to decreeing specific performance15-

(1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to
grant such relief merely because it is lawful to do so; but the discretion of the court is not
arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a
court of appeal.

(2) The following are cases in which the court may properly exercise discretion not to decree
specific performance:

(a) where the terms of the contract or the conduct of the parties at the time of entering into the
contract or the other circumstances under which the contract was entered into are such that the
contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or

(b) where the performance of the contract would involve some hardship on the defendant which
he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff;
or

(c) where the defendant entered into the contract under circumstances which though not
rendering the contract voidable, makes it inequitable to enforce specific performance.

Explanation 1 : Mere inadequacy of consideration, or the mere fact that the contract is onerous to
the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage
within the meaning of clause (a) or hardship within the meaning of clause (b).

Explanation 2: The question whether the performance of a contract would involve hardship on
the defendant within the meaning of clause (b) shall, except in cases where the hardship has
resulted from any act of the plaintiff subsequent to the contract, be determined with reference to
the circumstances existing at the time of the contract.

(3) The court may properly exercise discretion to decree specific performance in any case where
the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of
specific performance.

(4) The court shall not refuse to any party specific performance of a contract merely on the
ground that the contract is not enforceable at the instance of the party.

15
http://www.advocatekhoj.com/library/bareacts/specificrelief/20.php?Title=Specific%20Relief%20Act,
%201963&STitle=Discretion%20as%20to%20decreeing%20specific%20performance
Contracts which cannot be specifically enforced-
There are some contracts which cannot be specifically enforced due to potential restrictions and
issues with the legality of the contract itself 16. Section 14 of the Specific Relief Act, 1963, talks
about contracts that cannot be specifically enforced. Furthermore, any contract that requires
some sort of skill or knowledge, i.e. singing, playing an instrument, etc., cannot be specifically
enforced.

There are several other reasons as to why courts will not enforce contracts, and therefore, it is
important to be mindful of such contractual issues so that you are aware of your rights before
attempting to bring a lawsuit for “specific performance,” which is the court’s requirement that
the breaching party perform what is required of him or her in the contract.

The following types of contracts cannot be enforced:

- A contract for the nonperformance (breach) in which compensation is proper relief.

- A contract that becomes too complex with too much detail involved
- A contract that involves personal skill or knowledge (as mentioned above)
- A contract that has uncertainty
- A contract that is revocable
- A contract that is made by a trustee who has no authority to enter into the contract
- A contract involving a corporation or public company that is created for special purposes
- A contract that involves the performance of continuous duty in which the court cannot
possibly supervise on an ongoing basis

16
https://www.upcounsel.com/contracts-which-cannot-be-specifically-enforced
 EXCEPTIONS TO THE SPECIFIC
PERFORMANCE OF CONTRACT

An order of specific performance is generally not granted if any of the following is

true17:

- Specific performance would cause severe hardship to the defendant.

- The contract was unconscionable.
- Common Law damages are readily available or the detriment suffered by the claimant is
easy to substitute, then damages are adequate.
- The claimant has misbehaved (unclean hands).
- Specific performance is impossible.
- Performance consists of a personal service.
- The contract is too vague to be enforced.
- The contract was terminable at will (meaning either party can renege without notice).
- Note that consumer protection laws may disallow terms that allow a company to
terminate a consumer contract at will (e.g. Unfair Terms in Consumer Contracts
Regulations 1999).
- The contract required constant supervision.
- Mutuality was lacking in the initial agreement of the contract.
- The contract was made for no consideration.
- Specific performance will not be granted for contracts which are void or unenforceable.
The exception to this (in equity) is in relation estoppel or part performance.
- Where an injunction to restrain an employee from working for a rival employer will be
granted even though specific performance cannot be obtained.

17
https://gradestack.com/Mercantile-Law-for-the-CA/Remedies-for-Breach-of/Exceptions/22686-4473-56010-
study-wtw
 CASE LAWS

Jagdish Singh Vs. Nathu Singh

Facts-
Respondent-Natthu Singh sold plot to the appellant for a consideration of Rs. 15,000/-. On the
very day, another agreement was entered into between the parties whereunder appellant agreed
to reconvey the said properties to the respondent against payment of Rs. 15,000/- within two
years. On 2-6-197518, well within the period of two vears stipulated for the performance of the
agreement to re-sell, respondent instituted the suit for specific performance alleging that despite
offer of performance and tender the price, appellant, with the dishonest intention of appropriating
the properties to himself refused reconveyance. The appellant contested the suit principally on
the ground that respondent was never ready and willing to perform the contract and that
respondent himself was in breach.

Verdict-
In the present case there is no difficulty in assessing the quantum of the compensation. That is
ascertainable with reference to the determination of the market value in the land acquisition
proceedings. The compensation awarded may safely be taken to be the measure of damages
subject, of course, to the deduction therefrom of money value of the services, time and energy
expended by the appellant in pursuing the claims of compensation and the expenditure incurred
by him in the litigation culminating in the award. We accordingly confirm the finding of the
High Court that Respondent was willing and ready to perform the contract and that it was the
Appellant who was in breach. However, in substitution of the decree for specific performance,
we make a decree for compensation, equivalent to the amount of the land acquisition
compensation awarded for the suit lands together with solatium and accrued interest, less a sum
of RS.1,50,000/- (one lakh fifty thousand only) which, by a rough and ready estimate, we
quantify as the amount to be paid to the appellant in respect of his services, time and money
expanded in pursuing the legal-claims for compensation.

18
http://www.the-laws.com/Encyclopedia/Browse/Case?CaseId=001991236000
Jayakantham and Others versus Abaykumar

Facts-
The Supreme Court observed that an agreement to sell was entered into between the Appellants
and the father of the Respondent on June 2, 1999 19. The agreed consideration between the parties
was Rupees One Lakh and Sixty Thousand, out of which an amount of Rupees Sixty Thousand
was paid at the time of execution of the agreement to sell. The sale transaction was to be
completed within three years against the payment of the balance of Rupees One Lakh. A legal
notice seeking performance of the agreement to sell was issued on May 7, 2002 by the
Respondent. In response to the legal notice, the defence set up by the Appellants was, inter alia,
that the agreement to sell was executed only as a security for a loan transaction as the father of
the Appellants was a money lender (which was an admitted fact). The Supreme Court observed
that there was no error in finding of the facts by all the three courts and hence on merits the
judgment cannot be reversed. However, the Appellants drew the attention of the Supreme Court
to an alternative submission that the suit property is the only property held by the Appellants and
has an extremely high value. The Appellants further stated that they are ready to pay a sum of
Rupees Ten Lakhs or even more to retain the suit property. The Supreme Court considered this
limited question/alternative argument in its judgment.

Verdict-
The Supreme Court noted that the terms of the contract, the conduct of parties at the time of
entering into the agreement and circumstances under which the contract was entered into gave
the Respondent an unfair advantage over the Appellants thereby making it inequitable to enforce
the relief of specific performance. Since the Appellants offered to pay an amount of Rupees Ten
Lakhs as compensation in lieu of specific performance, the Supreme Court held that payment of
compensation of Rupees Fifteen Lakhs to the Respondent would meet the ends of justice.

19

http://www.mondaq.com/india/x/657046/Contract+Law/Specific+Performance+Of+An+Agreement+To+Sell+Of+A
n+Immovable+Property
 CONCLUSION

There is an ongoing debate in the legal literature regarding the desirability of specific
performance. Specific performance should be reserved to exceptional settings, because it is
costly to administer and may deter promisors from engaging in efficient breed.

The principle of equity have to be applied to the area of contract law otherwise there would be
many cases whereby aggrieved party would not get justice, thus nullifying the rationale behind
having any law or even the judiciary.

The conduct of parties is very much important in a suit for specific performance, the party who
seek for relief of specific performance must approach the Court of Law with clean hands. In
other words, in a suit for specific performance of the contract, the plaintiff must establish his
readiness and willingness to perform his part of the contract.

Further, while preparing plaint and written statement, parties should also take proper care and
caution and the relief must be clear and specific. Apart from this, the court must exercise his
discretionary power in a reasonable manner by following the principles of natural Justice,
Equity, and Good Conscience.