Contracts III
A nonbreaching party may not seek specific performance when: A-when the contract is for the sale of land B-when a service contract is involved C-when the legal remedy is inadequate D-when the subject matter of the contract is rare
Specific performance is not available for breach of a service contract, because of (i) difficulty supervising the performance, and (ii) courts feel it is tantamount to involuntary servitude. Specific performance only when the legal remedy is inadequate, such as when the subject matter of the contract is rare or unique. Because all land is considered to be unique. Specific performance is granted when: (i) there is a valid contract; (ii) the legal remedy is inadequate; (iii) enforcement is feasible; and (iv) mutuality of remedy is present.
A property owner decided that she would turn the garage on her property into an exercise area, including a modern sauna and spa. She entered into a written agreement with a contractor who agreed to do the job personally for $12,500, which included all requisite plumbing, electrical, and carpentry work. The contractor was to begin work by May 14. On May 15, he had not yet appeared to start the job. The property owner telephoned the contractor, who told her that he was hired for a big job that was going to pay him "a lot more money than that marginal project of yours, so I'm not going to work on your garage." Over a period of several months, the property owner made many calls to local contractors, but none of them would agree to do the job for the price agreed upon by the original contractor. On June 3 of the following year, the property owner filed suit for specific performance against the original contractor. Which of the following represents the contractor's best argument in his defense against the property owner's suit? A-Specific performance is an equitable remedy, and because the property owner waited for over a year to sue, the equitable defense of laches will apply. B-Specific performance is inappropriate, because a contract for services is involved. C-Specific performance is inappropriate, because nominal legal damages are available to the property owner. D-Specific performance is inappropriate, because the property owner's failure to obtain another contractor for the job is an indication that $12,500 was an unfair price.
The contractor's best argument is that a contract to provide services is not specifically enforceable. Specific performance is granted when: (i) there is a valid contract; (ii) the legal remedy is inadequate; (iii) enforcement is feasible; and (iv) mutuality of remedy is present. One of the prerequisites to obtaining specific performance is that a plaintiff must show that the legal remedy is inadequate. Where the plaintiff has contracted for something rare or unique, money damages are inadequate compensation for loss of the bargain. Generally, contracts for services are not unique and money damages can remedy a breach. In addition, even in the case of unique services, a court will not order a defendant to work for the plaintiff, in part because of the difficulty of enforcement and because such an order is tantamount to unconstitutional involuntary servitude. Another requirement for specific performance is that enforcement must be feasible. Enforcing a services contract generally would create complicated and time-consuming supervision problems that courts are reluctant to undertake. In this case, the contractor agreed to personally perform for the property owner plumbing, electrical, and carpentry work. Thus, this was a contract to provide services. However, the services to be performed by the contractor were not unique or capable of being performed solely by him. The property owner could obtain adequate compensation by receiving the amount, above her contract price with the contractor, that it will cost to have someone else perform the required work (plus reasonable compensation for the delay in performance). Thus, specific performance is inappropriate here.
When a party that offers a rare or unique service has breached a service contract, the court may grant __________ to the nonbreaching party. A-specific performance B-punitive damages C-restitution D-injunctive relief
A court may grant injunctive relief to enjoin a breaching party from working for a competitor throughout the duration of the contract if the services contracted for are rare or unique. Specific performance is not available for breach of a contract to provide services. Punitive damages are generally not awarded in contract cases. Restitution is available as an alternative to contract damages in a non-contract situation to prevent unjust enrichment. Here there is a contract and there are no facts indicating unjust enrichment.
A distributor of electric toy trains and a hobby shop owner entered into a written contract providing that the distributor will tender to the shop owner four dozen of a popular electric train set at a price of $100 apiece, to be delivered no later than October 31, to take advantage of the holiday shopping season. The shop owner chose to order from this distributor because its price for the train set was lower than that of other distributors. Shortly after the shop owner placed his order, the distributor raised its prices due to a sudden surge in popularity of that train set. Because the distributor did not have enough train sets to accommodate everyone due to the surge of orders, it decided to deliver train sets only to those buyers who had ordered them at the increased price. The distributor notified the shop owner that it would not deliver the train sets it ordered. The shop owner filed an action to force the distributor to deliver the train sets at the agreed-upon price. Will the court compel the distributor to deliver the train sets to the shop owner? A-No, because a contract for the sale of goods is not subject to specific performance. B-No, because the shop owner can buy them from another distributor. C-Yes, because the shop owner will not be able to buy them from another source at the contract price. D-Yes, because time is of the essence.
Because the shop owner can cover (i.e., buy the train sets from another source), a court will not grant specific performance. If the seller fails to deliver goods under a valid contract, the buyer has a number of remedies available, including the right to cover and the right to obtain specific performance if appropriate. A buyer may obtain specific performance of a contract for the sale of goods if the goods are unique or in short supply, but that does not appear to be the case here because the other distributors carried that train set. Thus, the shop owner can buy the train sets from another distributor and get the difference between the cost of the substitute goods and the contract price.
One Saturday, the owner of an art gallery and her friend were discussing art after the friend had helped the owner move some furniture in her home. The friend mentioned that he was very fond of a particular artist. The gallery owner asked her friend if he would like to buy a painting by the artist, entitled "Tears of a Clown," recently consigned to the gallery. The friend said that he would love it, but he only had $2,700. The gallery owner told her friend that she would let him have the painting for that price. The friend knew that the painting was priced at $7,000. He immediately wrote out a check for $2,700 and gave it to the gallery owner, who told him to visit the gallery on Monday to pick up the painting. On Sunday, a salesperson at the gallery sold "Tears of a Clown" to a gallery customer. Neither the salesperson nor the customer knew of the agreement between the gallery owner and her friend. The customer took the painting with him on Sunday. When the friend arrived at the gallery on Monday, the painting was gone. Can the friend obtain specific performance from the gallery owner? A-Yes, because there was a bargained-for exchange of promises between the friend and the gallery owner. B-Yes, because the friend's assistance to the gallery owner in moving her furniture should be considered part of the quantum of adequate consideration. C-No, because the painting was sold to a bona fide purchaser for value and enforcement against the gallery owner is no longer feasible. D-No, because the gallery owner's promise was essentially a gift to her friend that she was free to revoke.
The salesperson sold the painting in good faith to a customer. Because the gallery owner no longer actually has the painting, there is no way to specifically enforce her agreement to convey it to her friend. Specific performance is granted when: (i) there is a valid contract; (ii) the legal remedy is inadequate; (iii) enforcement is feasible; and (iv) mutuality of remedy is present. The gallery owner and her friend had a contract, pursuant to which the gallery owner promised to sell her friend the painting for $2,700. Although this was an oral contract for the sale of goods for a price exceeding $500 and thus subject to the Statute of Frauds, the contract is removed from the Statute by the fact that the friend tendered full payment for the painting. Thus, the oral nature of the agreement is no hindrance to its validity. Moreover, a painting, by its nature, is unique, rendering the legal remedy (damages) inadequate. However, feasibility of specific performance against the gallery owner is lacking here. The salesperson sold the painting to a customer who paid value for it and was unaware that the gallery owner had already agreed to sell it to her friend. The salesperson also was unaware of the gallery owner's agreement with her friend. With the subject matter of the contract having been transferred in good faith to a third party, there is no feasible means to enforce against the gallery owner her agreement to sell the painting to her friend. Thus, the right to specific performance is cut off.
The right to specific performance in a land sale contract is cut off if the subject matter of the contract has already been sold to another who purchased for value and in good faith. This is known as the equitable defense of: A-Laches B-Sale to a bona fide purchaser C-Replevy D-Unclean Hands
This is known as the equitable defense of sale to a bona fide purchaser. The equitable defense of laches arises when a party delays in bringing an equitable action and the delay prejudices the defendant. Note that mere delay itself is not a ground for this defense. The unclean hands defense arises when the party seeking specific performance is guilty of some wrongdoing in the transaction being sued upon. Note that the wrongdoing must be related to the transaction being sued upon; it is not sufficient that the plaintiff has defrauded other persons in similar transactions. Replevy is a nonmonetary remedy found in Article 2 of the UCC. If a buyer has made at least part payment of the purchase price of goods that have been identified under a contract and the seller has not delivered the goods, the buyer may replevy (or recover) the goods from the seller if the seller becomes insolvent within 10 days after receiving the buyer's first payment or the goods were purchased for personal, family, or household purposes. In either case, the buyer must tender any unpaid portion of the purchase price to the seller.
