Specific performance of the contract 

Question: Which contracts can be enforced and which contracts cannot be enforced? Discuss with the relevant section & examples. For which reasons a Court can refuse to give a decree of specific performance of contract even though the contract is legal and

Answer:

Specific performance of the contract:

When a party to a contract suffers irreparable loss due to a breach of contract for which financial compensation is not considered enough or adequate, then s/he can sue before the court to enforce the terms of the contract, this is called a specific performance of the contract. Where breach of contract causes loss to any of the parties of the contract, the relief of which is not considered enough, appropriate and adequate through financial compensation, there, as the financial compensation is not sufficient, the aggrieved party is allowed to claim specific performance of the contract as appropriate and legal relief Section 12 of the Specific Relief Act, 1877, states about the Contract in which specific performances are enforceable and contracts are not specifically enforceable are described in Sections 21 and 21A.

When the Court may execute the specific performance of a contract:

The second relief under Section 5 of the Specific Relief Act, 1877, is the specific performance of a contract. Section 12 of the Specific Relief Act, 1877, has given court the discretionary power of order to perform specifically regarding a contract. When a party enters into a contract, then, a legal obligation creates between them. Under Section 12 of the Act, a court may order to perform a contract in four cases, but a contract must be occurred to claim relief under Section 12. According to section 12 of the Specific Relief Act, 1877 the court has the discretionary power to order the execution of a specific performances of contract in the following cases:

1. If the performances of contract related to the trust:

According to Section 12 (a) of this Act, when the act agreed to be done is in the performance, wholly or partly, of a trust. Example: 'A', has stocked some products to 'B'. Later 'B' illegally transfers that product to another. In this case a legal obligation arises on 'B' to return the product to 'A'. In this case, the court may direct 'B' to return the product to 'A'.

2. If there is no standard for determining the loss for breach of contract:

According to Section 12 (b) of this Act, when there exists no standard for ascertaining the actual damage caused by non-performance of the act agreed to be done, Example- 'A' agrees to buy, and 'B' agrees to sell, a picture by a dead painter and two rare china vases. 'A' may compel 'B' specifically to perform this contract, for there is no standard for ascertaining the actual damage which would be caused by its non-performance.

3. If pecuniary compensation is not considered adequate:

According to Section 12 (c) of this Act, when the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief. Example: - 'A' entered into a contract with 'B' to buy a piece of patriarchal land. If 'B' later refuses to sell it, the court may order him to perform the contract.

4. If there is no possibility of getting pecuniary compensation:

According to Section 12 (d) of the Specific Relief Act, when it is probable that pecuniary compensation cannot be got for the non-performance of the act agreed to be done. Example: - 'A' transfers without endorsement, but for valuable consideration, a promissory note to 'B'. 'A' becomes insolvent, and 'C' is appointed his assignee. 'B' may compel 'C' to endorse the note, for 'C has succeeded to A's liabilities, and a decree for pecuniary compensation for not endorsing the note would be fruitless.

When specific performance of a contract is not enforceable:

The agreement cannot be specifically enforced in the 8 cases as per under section 21 of the Specific Relief Act, 1877:

1. Adequate relief by pecuniary compensation:

According to section 21 (a) of the Specific Relief Act, a contract for the non-performance of which compensation in money is an adequate relief. Example: 'A' was contracted to sell 100 boxes of soap to 'B' for Tk 20,000. If 'A' refuses to provide it at a later time, 'B' will not be able to sue for the specific enforcement of the said agreement. Because the damage caused by this breach of contract is compensable by money.

2. Depending on personal merit or determination

According to section 21 (b) of the Specific Relief Act, a contract that runs with

A) The sum of complex and innumerable detailed descriptions or

B) depending on the personal qualification or determination of the parties or

C) The nature of the contract in any other way is such that the court cannot enforce its significant terms precisely.

Example: - A is a singer. He made a contract to perform at B's hotel. If he does not perform later, the court cannot force him to enforce the contract.

3. The terms of the contract cannot be determined with reasonable certainty:

According to Section 21 (c) of the Specific Relief Act, the terms of the contract cannot be determined by the court with reasonable certainty. Example: If B can send A's son abroad, B agrees to give him a gold chain. In this matter, the terms of the contract are not certain because it is not clear how much gold and where to send it abroad. Therefore, the court will not issue directions for the implementation of such agreements.

4. The contract is naturally revocable:

According to Section 21 (d) of the Specific Relief Act, the contract is voidable or revocable due to its nature. Example:- 'A' and 'B' contract to become partners in a certain business, the contract not specifying the duration of the proposed partnership. This contract cannot be specifically performed, for, if it were so performed, either 'A' or 'B' might at once dissolve the partnership.

5. Contract made by the trustees:

According to Section 21 (e) of the Specific Relief Act, a contract made by trustees either in excess of their powers or in breach of their trust. Example: 'A' is a trustee of land with power to lease it for seven years. He enters into a contract with 'B' to grant a lease of the land for seven years, with a covenant to renew the lease at the expiry of the term. This contract cannot be specifically enforced.

6. Agreements made by the promotors of the company or corporations:

According to Section 21 (f) of the Specific Relief Act, a contract made by or on behalf of a corporation or public company created for special purposes, or by the promoters of such company, which is in excess of its powers. Example:- If a company formed with the aim of building a railway enters into an agreement to purchase A company existing for the sole purpose of making and working a railway contract for the purchase of a piece of land for the purpose of erecting a cotton-mill thereon. This contract cannot be specifically enforced.

7. It takes more than 3 years to perform:

According to Section 21 (g) of the Specific Relief Act, a contract the performance of which involves the performance of a continuous duty extending over a longer period than three years from its date. Example: 'A'contract to-let for twenty-one years to 'B' the right to use such part of certain railway made by 'A' as was upon 'B's land, and that 'B' should have a right of 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'.

8. The contents of the contract have been repealed:

According to Section 21 (h) of the Specific Relief Act, a contract of which a material part of the subject matter, supposed by both parties to exist, has, before it has been made, ceased to exist. Example: 'A' and 'B' are contracted with 'C', 'D' for lifelong annual scholarship. It was later revealed that 'A' was not alive at the time of making the contract. This Agreement cannot be specifically performed.

Unregistered contract for sale not specifically enforceable:

According to section 21A of the Specific Relief Act, 1877, notwithstanding anything to the contrary contained in this Act or any other law for the time being in force, no contract for sale of any immovable property can be specifically enforced unless-

(a) the contract is in writing and registered under the Registration Act, 1908, whether or not the transferee has taken possession of the property or any part thereof; and

(b) the balance amount of consideration of the contract is deposited in the court at the time of filing the suit for specific performance of the contract.

Reasons behind non-granting of decree even if the contract is legal and valid:

According to section 22 of the Specific Relief Act, '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.

Question: Briefly describe the various types of specific reliefs that can be given in accordance with the Specific Relief Act, 1877. What are the conditions to be fulfilled in order to get relief for specific performance of contract for sale of immovable property? What specific reliefs can be prayed for in such a suit?

Answer:

Specific reliefs discussed in the Specific Relief Act, 1877:

Specific reliefs can be given in the five ways mentioned below:

1. By taking possession of certain property and delivering it to a claimant;

2. By ordering to do the very acts which are obligatory to do;

3. By ordering not to do that which is obligatory not to do

4. By determining and declaring the rights of the parties otherwise than by an award of compensation; or

5. By appointing a receiver.

1. The various types of specific reliefs allowed under the specific Relief Act, 1877 are briefly described:

Sections 8 and 9 of the Specific Relief Act, 1877 state about recovery of possession, when a person is dispossessed from immovable property. The point to be considered is that, if the dispossessed person has the title ownership to the land, then he has to file a suit under section 8 and claim for recovery of the khas possession. The plaintiff must prove the title ownership of certain immovable property. The possession of plaintiff of the said property is not important to be proved. According to section 110 of the Evidence Act, the person claiming possession has to prove ownership. However, if the dispossessed person does not have the title ownership to the land, then he has to file a suit under section 9 to recovery of the possession. Apart form this, recovery of possession for moveable property can be claimed under sections 10 and 11 of this Act.

2. Specific Performance of Contract:

As per Section 12 of the Specific Relief Act, 1877, a court may order to perform a contract in four cases, but a contract must be occurred to claim relief under Section 12.

The court has the discretionary power to give specific relief. The Court may give order for specific performance of contract in the following cases:

1. when the act agreed to be done is in the performance, wholly or partly, of a trust;

2. when there exists no standard for ascertaining the actual damage caused by non-performance of the act agreed to be done;

3. when the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief; or

4. when it is probable that pecuniary compensation cannot be got for the non-performance of the act agreed to be done.

3. Preventive Relief: 

Sections 52-57 of the Specific Relief Act, discussed about the preventive reliefs by granting temporary or permanent injunctions by the court. By injunctions a party can be enforced to act or refrain from doing an act. The Specific Relief Act mainly deals with 3 types of injunctions-

1. Temporary Injunction

2. Perpetual Injunction

3. Mandatory Injunction

4. Appointment of Receiver:

It is the discretion of the court to appoint a receiver while the suit is pending under Section 44 of the Specific Relief Act. The appointment of the receiver and his rights and liabilities are governed by the provision of the Code of Civil Procedure. [ Order 40, Civil Procedure]

5. Declaration or Declaratory Decrees:

According to Section 42 of the Specific Relief Act, a person who has the title-ownership to a property or a person who has a right to legal status can exercise without any interference. If someone raise question or interferes with title-ownership or legal status, he or she can sue and get a declaration of his or her title. Such a Suit is called a declaratory suit. Sections 31 to 34 of the Specific Relief Act have also discussed about amendment of documents, sections 35 to 38 of the Specific Relief Act discussed about rescission of contract and sections 39 to 41 of the Specific Relief Act have discussed about cancellation of document to give relief.

Conditions to be fulfilled in order to get the relief for specifically enforcing the contract for sale of immovable property:

According to section 21A of the Specific Relief Act, 1877, Notwithstanding anything to the contrary contained in this Act or any other law for the time being in force, no contract for sale of any immovable property can be specifically enforced unless-

(a) the contract is in writing and registered under the Registration Act, 1908, whether or not the transferee has taken possession of the property or any part thereof; and

(b) the balance amount of consideration of the contract is deposited in the court at the time of filing the suit for specific performance of the contract.

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