What is Specific Performance in San Diego? (Part I)
With respect to business contracts in California, “specific performance” is one of several remedies that a San Diego business can seek for breach of contract. For this part I on specific performance in California, here are a few basic legal principles and a case law example.
San Diego Businesses: What is Specific Performance?
Under California law, the remedy of specific performance is allowed if five conditions are met. The conditions are:
- Money damages are inadequate — that is, the plaintiff’s legal remedy is inadequate
- The underlying contract that is both reasonable and supported by consideration
- The existence of a “mutuality of remedies” — that is, both sides can perform if ordered to
- Contract terms which are sufficiently definite to enable the court to know what it is to enforce; and
- A substantial similarity of the requested performance to that promised in the contract. See Cal. Civ. Code, §§ 3307, 3384, 3386, 3390, 3391)
The most common cases of specific performance are purchases of real property. Because each house and each lot and each property is unique, money damages are not adequate to give the purchaser the benefit of his or her bargain if the seller breaches. Money damages will not buy you THAT particular view, THAT particular combination of kitchen, reading nook, and sunshine in the morning or THAT particular garden with THAT particular 100-year-old California oak tree. Under California law, there is a presumption “that the breach of any agreement to transfer real property cannot be adequately compensated for by money damages.” BD Inns v. Pooley, 218 Cal.App.3d 289 (Cal. App. 1990). So, if the seller breaches, the buyer may seek specific performance which means that a Judge of Equity will order the seller to go through with the sale as per the contract.
Elements 2 and 4 are concerned with ensuring the contract was actually made and that it was definitive enough to be specifically enforced. Element 3 is concerned with making sure that both buyer and seller can perform. If, for example, the house-buyer no longer has the cash or the financing to consummate the purchase, then the remedy of specific performance would be pointless. Element 5 is about giving some flexibility to the judge in fashioning a specific performance remedy.
Specific Performance: Case Example
Tamarind Lithography Workshop, Inc. v. Sanders, 143 Cal. App. 3d 571 (Cal. App. 1983) is a good example of specific performance in circumstances not involving the purchase of real property. In that case, the plaintiff sought specific performance for the breach of an agreement to give him screen credits for writing, directing, and producing a motion picture. The main issue in the case was whether money damages were a sufficient remedy. The court noted that screen credits are undoubtedly valuable in the manner of advertising and publicity for the artist(s) responsible for making the film.
The court discussed at length various methods of how money damages might be calculated to compensate an artist for not being given promised screen credits. Ultimately, the court concluded that money damages could compensate a plaintiff for PAST screenings and showings of the film, but that money damages could not compensation the plaintiff for FUTURE screenings and showings of the film. As such, the court ordered that the artist’s name be added to the screen credits going forward. The court stated:
“It is manifest that the legal remedies available to Sanders for harm resulting from the future exhibition of the film are inadequate as a matter of law. The primary reasons are twofold: (1) that an accurate assessment of damages would be far too difficult and require much speculation, and (2) that any future exhibitions might be deemed to be a continuous breach of contract and thereby create the danger of an untold number of lawsuits.”
Specific Performance: Waiver of Specific Performance
As a San Diego business owner, if you feel that you need protection from specific performance lawsuits, which can be expensive and time consuming, and tie up valuable property and goods, then an experienced and dedicated business law attorney can help. First, by written contract, you could seek to have the other party to your contract waive the right to sue for specific performance. If this is rejected, at minimum, this provides you with information; your contracting party thinks specific performance might be needed. Now you must incorporate this information into your strategy, maybe this buyer is not the right buyer.
Alternatively, your experienced business law attorney might draft contract language limiting the right of specific performance to certain acceptable circumstances.
Contact San Diego Corporation Law Today
If you would like more information about specific performance clauses and how courts apply such clauses, or if you would like more information about using or limiting such clauses in your San Diego business contracts, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email.