Holding Parties to Contracts and Agreements
When parties enter into an agreement or contract, they generally adopt the rights and obligations that were decided upon.
It is often the case that one or more party becomes unhappy with their agreement and refuses to comply with, or perform their obligations, as to hold up their side of the agreement. In this circumstance, a party may seek to rely on the specific performance remedy.
Specific performance is a court ordered remedy which compels a non-compliant party to perform their contractual obligations. Parties may apply for this remedy where they can establish there is a binding contract that has or is likely to be breached.
Actual Breach: The party is refusing to perform their obligations under the contract or agreement.
Anticipated Breach: There is a real possibility the party will refuse to perform their obligations under the contract or agreement.
When will it be ordered?
Specific performance is an equitable remedy granted by the Court in accordance with section 68 of the Supreme Court Act 1970 (NSW). Importantly, this remedy is discretionary, meaning it will only be made on a case by case basis.
Some circumstances where the court is unlikely to grant this remedy include where:
- other monetary damages would provide sufficient compensation to the dispute;
- the contract or agreement requires parties to maintain a personal relationship (ie employment contract);
- it would cause unconscionable hardship on the non-compliant party;
- the non-compliant party is not willing or able to perform their obligations;
- mistake, misrepresentation or undue influence was involved in the making of the contract or agreement;
- the obligations required to be performed are ambiguous or unclear as to set the non-compliant party up for failure; and where
- the complaining party has also substantially breached the contract.
Perhaps the most common circumstance courts will award this remedy is where the true amount of damages is unknown or the dispute is not merely a matter of money.
If you believe a party to an agreement or contract is not fulfilling their contractual obligations or is likely to refuse these obligations, it is important to seek legal advice. Similarly, parties who may be subject to proceedings for an anticipated or actual breach of contract should seek advice to avoid penalties.
Parties who fail to comply with any court order for specific performance may additionally be found guilty of contempt of court and can be either fined or imprisoned.