How specific performance clauses work

On Behalf of | Sep 14, 2022 | Business Disputes, Outsourced Business Counsel, Real Estate Litigation |

Those who breach a contract often leave the other non-breaching party in a difficult position. It can involve financial loss, liability or other complications. However, if the contract had a specific performance clause included in a valid contract, the breaching party may still need to fulfill the contract’s terms. In such cases, the courts can order the defendant to perform their contractual duties as initially agreed.

When money doesn’t cover the damages

These clauses aren’t for every business agreement but can be very beneficial in situations where a monetary reward is inadequate to offset the damage caused by the breach. Often it involves something in short supply, special or unique. Some examples include:

  • Sale of real property: If the owner changes their mind in violation of the agreement, they may have to sell the property because it is unique and potentially irreplaceable.
  • Sale of raw materials: Many manufacturers depend upon specific hard-to-find raw materials to build products and keep the business running.
  • Sale of artwork: An artist may be commissioned to create a specific piece of art but have second thoughts once the work is complete.

These clauses are only enforceable if the contract it is a part of is valid, fair and equitable. One-sided or unfair agreements will be unenforceable.

Drafting the proper contract makes a difference

All businesses rely upon contracts to get things done in a timely and predictable fashion. The strength and enforceability of those contracts are essential to the company’s long-term success, so working with an experienced and knowledgeable who understands specific performance clauses can be especially beneficial in protecting a company’s interests.