Contract Remedies in Action: Specific Performance

Abstract

How is a right to specific performance of a contract used by parties? Despite longstanding scholarly interest in the topic, this question has been largely left unexplored. This Article presents a qualitative study of parties and attorneys involved in specific performance litigation. It investigates how parties choose between remedies, whether they negotiate after judgment for specific performance, if specific performance is implemented, and the difficulties involved in its implementation.

The findings reveal important theoretical oversights and challenges to prevailing law. In practice, many plaintiffs opt out of specific performance. This is puzzling as expectation damages are notoriously under compensatory relative to performance. A primary explanation is that it is harder to execute specific relief than a money judgment. Focusing attention on execution provides a valuable lesson: in exactly these circumstances where U.S. law grants specific performance — unique goods — it is least valuable due to a lack of clear standards by which to evaluate performance. Another explanation is lawyer’s bias: attorneys will often advise clients to sue money damages to ensure easy collection of their own fees.

Another set of findings reveal that parties think about specific performance in ways that are inconsistent with both economic and rights-based theories. Sometimes plaintiffs will not negotiate a judgment as they will be reluctant to commodify it, in contrast to economic theories, and other times they will treat specific performance instrumentally, to achieve other ends but performance of the contractual promise, which is in tension with rights-based theories. The Article concludes by discussing the theoretical and policy implications of these findings, and highlights the ways in which qualitative research could enrich, challenge, and contextualize contract theory.

Keywords: specific performance, empirical, remedies, damages, contract law, qualitative analysis, specific relief

JEL Classification: K12, D12