Specific performance is simply the court telling the breaching party to perform as they had promised. However, this remedy for a breach of contract is generally not favored by the courts. As such, there are certain requirements that the party requesting performance must show to obtain this remedy.
City Stores Co. v. Ammerman
394 F.2d 950 (D.C. Cir. 1968).
City Stores is the plaintiff.
Question
Whether specific performance is a necessary remedy.
Rules
- Terms of the contract must be sufficiently certain and definite for specific performance to apply. This is true even if the contract is lacking in terms (those can be worked through with negotiation and good faith).
- Other forms of remedy would be inadequate to put the plaintiff is the same position (e.g. performance would be unique, monetary damages are difficult or impossible to calculate).
- Other factors the court considers include:
- Difficulty of court oversight
- Unreasonable hardship to breaching party
Holding
Specific performance is an adequate remedy.
Facts
City Stores was working on an agreement with Ammerman. Included in this agreement was a promise that City Stores would help Ammerman petition for rezoning so that the area could be developed into a shopping center. In return, Ammerman was to provide City Stores with a lease to occupy the space.
However, Ammerman only had room for three stores. He had already signed leases with two. For the final store, he wanted to make an agreement with Sears. This final agreement would provide a greater profit than filling the position with City Stores.
So, City Stores sued to obtain an injunction against Ammerman making the agreement with Sears. Instead, Ammerman was to grant the final space to City Stores. At trial, the injunction was granted and Ammerman appealed.
Analysis
First, Ammerman contends that the letter sent was not an agreement. However, the court disagrees and says that the letter was a unilateral agreement which City Stores chose to enforce. Thus, the court then turns to the appropriate remedy.
Here, the court says that specific performance is an appropriate remedy. Even though the contract was lacking in terms, there was sufficient information provided to show what the lease should look like (similar to a blueprint). Additionally, other forms of remedy would not be viable because the land in question here is unique. Further, the court argues that specific performance would not put a large burden on the court for oversight. The terms are sufficient enough to draft a lease. Any agreements made in bad faith may be addressed by the court or arbitrator. Finally, there is no undue burden on the defendant because they put themselves in the current position (agreeing to only have three stores in the area, filling the other locations with the selected stores).
Additional Notes
Even if there are still details to work out, as long as the essential terms are easily determined, specific performance is not precluded. Other minor details may be negotiated in good faith.
Additionally, specific performance is appropriate when it is not possible to calculate monetary damages (too speculative).
Reier Broadcasting Company, Inc. v. Kramer
72 P.3d 944 (Mont. 2003).
Reier sued, seeking an injunction against Kramer. The trial court failed to allow the injunction and Reier appealed.
Question
Whether the injunction should be granted to prevent Kramer from breaching his contract.
Rule
Specific performance for a personal service contract is not allowed.
Holding
Asking the Coach not to perform another contract is essentially asking him to only perform the current contract. Since this is a personal service contract, that is not allowed. The denial of an injunction is affirmed.
Facts
Reier had a contract with Montana State University (MSU) that they would be the only party to broadcast MSU sports (Agreement 1). As a result, they obtained a contract with Coach Kramer that would allow them to conduct interviews (Agreement 2). Included in this second agreement was a clause that the Coach would not perform services for another other company competing with Reier.
However, the two agreements were set to expire at different times (2002 with MSU and 2004 with Kramer). So, when the first agreement with MSU expired, MSU sought out a different company to work with. Reier informed MSU of the contract with Kramer, but MSU ignored it, obtained a contract with a competitor, and informed Kramer that he was expected to conduct interviews with the new company in violation of the agreement with Reier.
Consequently, Reier sought an injunction against Kramer to prevent him from breaching the contract by offering his services to a competitor.
Analysis
There are two types of clauses, affirmative (something you do) and negative (something you do not do). A noncompete clause is an example of a negative clause (you promise not to work with competitors). So, the question really becomes, can enforcement of a negative clause indirectly result in specific performance for the affirmative clauses? The court thinks so. For instance, by saying that the Coach is unable to work for others is really a way of saying, you can only work for us. Thus, enforcement of the negative clause results in enforcement of affirmative clauses. Because the statute does not allow specific enforcement of personal service contracts, then the injunction against breach would not be allowed.
Once the breach occurs, the plaintiff would be able to recover other forms of damages.
Takeaways:
- The act of preventing one from violating the contact is an indirect way of enforcing the contract.
Additional Notes
Takeaways:
- Courts do not want to specifically enforce personal service agreements for policy and practical reasons (bad look and hard for the court to manage).
- The act of preventing one from violating the contact is an indirect way of enforcing the contract.
- Appropriate damages will be damages when the breach actually occurs.
Restatement (2d) Contracts § 367(1)
“A promise to render personal services will not be specifically enforced.”
However, some courts will enforce some noncompete agreements using the method denied by Montana.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
