CONTRACT SPECIFICALLY ENFORCEABLE----DOCTRINE OF MUTUALITY:,,,,FOR WHOM CONTRACTS MAY BE SPECIFICALLY ENFORCED

PRELIMINARY NOTE:
The contract is an agreement upon consideration to do or not to do a particular thing. If the person on whom this contractual obligation rests fails to discharge it, the other party has the right either to insist on the literal and actual performance of the contract or to obtain compensation for the non-performance of it. The former is called the ‘Specific Performance.’

The subject of Specific Performance is dealt in Part II, Chapter II of the Specific Relief Act, 1877; which may be classified under the following heads:‐

A. Contracts which may be specifically enforced;
B. Contracts which cannot be specifically enforced;
C. Parties to an action for specific performance
D. Specific performance with a variation;
E. Discretion of the Court in ordering specific performance;

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LEGAL PROVISIONS AND LAW:
Part II, Chapter II of the Specific Relief Act, 1877

 

MEANING OF SPECIFIC PERFORMANCE:

According to Halsbury: Specific performance is “an equitable relief given by the Courts in cases of breach of contract, in the form of a judgment that the defendant do actually perform the contract according to its terms and stipulation.”

Pomeroy defines it as “consisting in the contracting party’s exact fulfillment of obligation which he has assumed—in his doing or omitting the very act which he has undertaken to do or omit.”

 

CONTRACT SPECIFICALLY ENFORCEABLE: SECTION 12

The remedy of Specific Performance being an equitable remedy is at the discretion of the Court. But in the exercise of this discretion, the Court is governed by certain principles. The circumstances in which specific performance may be granted are enumerated in Section 12 of the very Act. Except as otherwise provided in this Chapter, the specific performance of any contract may in the discretion of the Court be enforced:

 

1. CASES IN WHICH SPECIFIC PERFORMANCE OF CONTRACT ENFORCEABLE:

(OR) WHAT THE PLAINTIFF SHOULD PROVE TO SUCCEED IN A SUIT FOR SPECIFIC PERFORMANCE OF A CONTRACT:

 

a) PERFORMANCE CONNECTED WITH THE CONTRACT OF A TRUST:
When the act agreed to be done is the performance, wholly or partly, of a trust.

b) NO STANDARD FOR ASCERTAINING DAMAGES:
Section 12 provides for specific performance of contract in those cases where there is no standard for ascertaining damages for the non‐performance of the contract. Further, enforcement of the specific performance is at the discretion of the court and no one can claim it as a matter of right.

c) MONEY COMPENSATION IS NOT ADEQUATE FOR RELIEF:
The specific performance will also be granted when compensation in money is not adequate relief in the facts and circumstances of the case. Damages may be considered to be an inadequate remedy if it is difficult to quantify them.

d) MONEY COMPENSATION CANNOT BE TAKEN:
When it is probable that pecuniary compensation cannot be got for the non-performance of the act agreed to be done.

 

2. SPECIFIC PERFORMANCE OF CONTRACT IN CASE OF IMMOVABLE AND MOVABLE PROPERTY: UNDER EXPLANATION OF SECTION 12

Explanation to Section 12 carries presumption in favour of plaintiff and declares that it should be presumed that compensation does not afford adequate relief in the following cases:

a) In all cases where the contract is for the transfer of immovable property.
b) In case of movable property where:
 i. The property is not an ordinary article but an article of special value or of special interest to the plaintiff.
 ii. The article is not easily obtainable in the market.
 iii. The property is held by the defendant as an agent or trustee of the plaintiff.

However, these presumptions can be rebutted by the defendant by proving the contrary.

 

3. CONDITIONS FOR APPLICABILITY OF SECTION 12:

a) The suit must relate to the specific performance of contract;
b) The case must fall within any of the Clauses (a) and (d);
c) The case must, in the discretion of the court, be fit one to warrant specific performance; and
d) The case must not fall within any of the Sections of Chapter II which prohibits specific performance.

 

4. DOCTRINE OF MUTUALITY:

No person can sue for specific performance if he cannot be sued for it, whether because he is a minor or for any other reason. The contract to be specifically enforced must be mutual. The doctrine of mutuality means the contract must be mutually enforceable by each party against the other. It does not, however, mean that for every right there must be a corresponding clause. A contract may contain a series of clauses and covenants which form the total bargain between the parties and each of them is the consideration for the other.

Mutuality in this context does not mean equality and exact arithmetical correspondence. It means each party to the contract must have the freedom to enforce his right under the contract against each other.

The doctrine of mutuality, though a technical one, is founded on common sense and amounts to this: that the party to the contract should not be bound to that contract when he could not enforce it against the other. In India, the contract by a minor himself is absolutely void.

 

CONTRACTS NOT SPECIFICALLY ENFORCEABLE

(OR) WHAT CIRCUMSTANCES A CONTRACT BETWEEN THE PARTIES CANNOT BE SPECIFICALLY ENFORCED BY ONE OF THE PARTIES TO A CONTRACT — SECTION 21.

The following contracts cannot be specifically enforced:

1. MONEY COMPENSATION IS ADEQUATE:
   A non-performance of a contract is not specifically enforceable when the compensation in money is an adequate relief.

2. WHERE THE PERFORMANCE OF CONTRACT IS IMPOSSIBLE:
   A non-performance of a contract is not specifically enforceable when;
     Contract runs into such minute or numerous details, or
     Which is so dependent on the personal qualifications or
     Volition of the parties, or
     Otherwise from its nature is such, that the Court cannot enforce specific performance of its material terms.

3. CONTRACT OF UNCERTAIN TERMS:
   A non-performance of a contract is not specifically enforceable when the court finds the terms of the contract with reasonable uncertainty.

4. CONTRACT OF REVOCABLE NATURE:
   A non-performance of a contract is not specifically enforceable when the contract is revocable in nature.

5. CONTRACT MADE BY TRUSTEE IN EXCESS OF THEIR POWERS:
   A non-performance of a contract is not specifically enforceable when a contract is made by trustees either;
     In excess of their powers or
     In breach of their trust.

6. CONTRACT MADE BY OR ON BEHALF OF A CORPORATION OR COMPANY IN EXCESS OF ITS POWER:
   A non-performance of a contract is not specifically enforceable when a contract is 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.

7. CONTRACT WHICH REQUIRES PERFORMANCE OF A CONTINUOUS DUTY:
   A non-performance of a contract is not specifically enforceable when a contract involves the performance of a continuous duty extending over a longer period than three years from its date.

8. WHEN MATERIAL PART OF SUBJECT MATTER CEASED TO EXIST:
   A non-performance of a contract is not specifically enforceable when 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.

9. CONTRACT REFERRING TO PRESENT OR FUTURE DIFFERENCE:
   A non-performance of a contract is not specifically enforceable when the contract refers to present or future differences to arbitration.

 

FOR WHOM CONTRACTS MAY BE SPECIFICALLY ENFORCED

(OR) WHO MAY OBTAIN SPECIFIC PERFORMANCE: SECTION 23

Specific performance of a contract may be obtained by:

1. ANY PARTY:
   Any party thereto may obtain a specific performance, who has interest in the performance of the contract.

2. REPRESENTATIVE IN INTEREST OR PRINCIPAL:
   Representative or principal of any party who already performed part of his performance in contract may obtain performance of a contract.
   EXCEPT:
     Where the learning, skill, solvency or any other personal quality of such party is a material ingredient in the contract, or
     Where the contract provides that his interest shall not be assigned, his representative in interest or his principal.

3. ANY PERSON BENEFICIALLY ENTITLED UNDER THE CONTRACT:
   Specific performance may be obtained by any person beneficially entitled under the contract of settlement on marriage, or a compromise of doubtful rights between members of the same family.

4. REMAINDERMAN:
   Specific performance may be obtained by the remainderman where the contract has been entered into by a tenant for life in due exercise of a power.

5. REVERSIONER IN POSSESSION:
   Specific performance may be obtained by a reversioner in possession, where the agreement is a covenant entered into with his predecessor in title and the reversioner is entitled to the benefit of such covenant.

6. REVERSIONER IN REMAINDER:
   Specific performance may be obtained by a reversioner in remainder, where the agreement is such a covenant, and the reversioner is entitled to the benefit thereof and will sustain material injury by reason of its breach.

7. AMALGAMATED COMPANY:
   Specific performance may be obtained by a company which arises out of the amalgamation of two public companies.

8. BY COMPANY AGAINST ITS PROMOTERS:
   A company may obtain performance against the promoters of a public company who have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation of the company

FOR WHOM CONTRACTS CANNOT BE SPECIFICALLY ENFORCED:

(OR) PERSONAL BARS TO THE RELIEF
(OR) WHO MAY NOT OBTAIN SPECIFIC PERFORMANCE — SECTION 24

Specific performance of a contract cannot be enforced in favour of a person:

1. PERSON WHO COULD NOT RECOVER COMPENSATION FOR HIS BREACH:
   Contract could not be specifically enforced for the person who could not recover compensation for its breach.

2. PERSON WHO INCAPABLE OF PERFORMING THE TERMS OF CONTRACT:
   Contract could not be specifically enforced for the person who is incapable of performing the terms of the contract.

3. PERSON WHO VIOLATES ANY ESSENTIAL TERM OF CONTRACT:
   Contract could not be specifically enforced for the person who violates any essential term of a contract on his part.

4. PERSON WHO HAS ALREADY OBTAINED RELIEF:
   Contract could not be specifically enforced for the person who has already chosen his remedy and obtained satisfaction for the alleged breach of contract; or

5. WHO ALREADY MADE SETTLEMENT ON SUBJECT MATTER:
   Contract could not be specifically enforced for the person who, previously to the contract, had notice that a settlement of the subject-matter thereof (though not founded on any valuable consideration) had been made and was then in force.

 

AGAINST WHOM CONTRACTS MAY BE SPECIFICALLY ENFORCED:

(OR) RELIEF AGAINST PARTIES AND PERSONS CLAIMING UNDER THEM BY SUBSEQUENT TITLE — SECTION 27

Specific performance of a contract may be enforced against:

1. ANY PARTY THERETO:
   Specific performance of a contract may be enforced against any party to the contract.

2. ANY PERSON CLAIMING TITLE:
   Specific performance may be enforced against any other person claiming under him by a title:
   a) Arising subsequently to the contract.
      Except a transferee for value who has paid his money in good faith and without notice of the original contract;
   b) Which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant.

3. COMPANY:
   Specific performance may be enforced against a public company which has entered into a contract and subsequently becomes amalgamated with another public company — the new company which arises out of the amalgamation.

4. PROMOTERS OF THE COMPANY:
   Specific performance may be enforced against the promoters of a public company who have, before its incorporation, entered into a contract for the company.
      Provided that the company has ratified and adopted the contract and the contract is warranted by the terms of the incorporation.

 

AGAINST WHOM CONTRACTS CANNOT BE SPECIFICALLY ENFORCED:

(OR) WHAT PARTIES CANNOT BE COMPELLED TO PERFORM — SECTION 28

Specific performance of a contract cannot be enforced against a party thereto in any of the following cases:

1. AGAINST PERSON WHO PAID INADEQUATE CONSIDERATION:
   If the consideration to be received by him is so grossly inadequate, with reference to the state of things existing at the date of the contract, as to be either by itself or coupled with other circumstances, evidence of fraud or of undue advantage taken by the plaintiff.

2. AGAINST PERSON WHO OBTAINED CONSENT WRONGFULLY:
   If his assent was obtained by misrepresentation (whether wilful or innocent), concealment, circumvention, or unfair practices of any party to whom performance would become due under the contract, or by a promise of such party which has not been substantially fulfilled.

3. AGAINST PERSON WHO OBTAINED BY MISTAKE OF FACT OR MISAPPREHENSION:
   If his assent was given under the influence of mistake of fact, misapprehension, or surprise.
     Provided that, when the contract provides for compensation in case of mistake, compensation may be made for a mistake within the scope of such provision, and the contract may be specifically enforced in other respects if proper to be so enforced.

 

 

PURCHASER'S RIGHTS AGAINST VENDOR WITH IMPERFECT TITLE — SECTION 18

Where a person contracts to sell or let certain property, having only an imperfect title thereto, the purchaser or lessee (except as otherwise provided by this Chapter) has the following rights:

1. PURCHASER MAY COMPEL VENDOR TO MAKE CONTRACT OUT OF SUBSEQUENTLY ACQUIRED INTEREST IN THE PROPERTY:
   If the vendor or lessor has subsequently to the sale or lease acquired any interest in the property, the purchaser or lessee may compel him to make good the contract out of such interest.

2. PURCHASER MAY COMPEL VENDOR TO PROCURE THE CONCURRENCE TO VALIDATE TITLE:
   Where the concurrence of other persons is necessary to validate the title, and they are bound to convey at the vendor's or lessor's request, the purchaser or lessee may compel him to procure such concurrence.

3. PURCHASER MAY COMPEL VENDOR TO REDEEM THE MORTGAGE:
   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 conveyance from the mortgagee.

4. PURCHASER MAY COMPEL THE VENDOR TO RETURN AMOUNT WITH INTEREST:
   Where the vendor or lessor sues for specific performance of the contract, and the suit is dismissed on the ground of his 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 of the vendor or lessor in the property agreed to be sold or let.