Specific performance as a general remedy

The Specific Relief (Amendment) Act 2018 changes the exceptional nature of specific performance as a remedy. Specific performance becomes a general remedy after the Amendment.

Before the amendment: Exceptional remedy

Before the Amendment, if a plaintiff asked for specific performance of his contract (or an injunction), he was required to show that his case was such that there was no standard to ascertain the actual damage caused by the non-performance (unascertainable), or even if compensation were granted, it will give him adequate relief (inadequate). His task was simpler when his contract was for transfer of immovable property, because a presumption assisted him. If his contract was for transfer of immovable property, it was presumed that compensation would be inadequate. If his contract was for transfer of movable property, the presumption of inadequacy would be drawn if he showed that the property was not ordinary article of commerce, or was of special value to him, or the goods were of a type that were not easily obtainable in the market. (Section 10 before its amendment)

There are sound historical and economic justifications for retaining exceptional nature of this remedy. These are discussed in my article ‘Exceptional Nature of Specific Performance’. The Indian law before its amendment had not become outdated, as was made out while the Bill was presented in the two Houses of Parliament. Many countries continue to retain the exceptional nature of this remedy, especially those that follow the common law tradition : USA – most States, UK, Singapore, Canada, Australia, Malaysia, Kenya, Pakistan, Bangla Desh, Sri Lanka.

When the remedy is exceptional, the legal system pre-empts the choice of remedy. This requires the plaintiff to show his entitlement to the remedy; the burden of proving entitlement falls upon the party aggrieved by the breach of contract. With the additional element of discretion, it becomes uncertain for the plaintiff to obtain, and therefore to seek, specific performance or injunction. It becomes uncertain for his lawyer to advise whether to ask for specific performance or not. Often, the plaintiff might be compelled to rest content with a claim for compensation.

After the amendment: General remedy

Section 10 as amended now provides: “The specific performance of a contract shall be enforced by the court subject to the provisions contained in … … …”. The relief is now open to any plaintiff who wants it.

Let the plaintiff choose his remedy, and the law should not interfere in his choice. Prof Alan Schwartz in his article ‘The Case for Specific Performance’ advocates the view that the promisee should be able to choose his remedy. When specific performance is available to anyone who seeks, there is no hierarchy of remedies.

The plaintiff can ask for specific performance (also called enforced performance) in many legal systems :France, Germany, China, Switzerland, Spain, Denmark, Finland, Israel, Japan. Many international conventions also enable specific performance by choice : Principles of European Contract Law, UN Convention on the International Sale of Goods, UNIDROIT Principles.

One might fear that this change will swamp the civil courts with suits for specific performance. That is not expected. Plaintiffs  by themselves, and also when advised by lawyers, are expected to be wise in their choice. Only those will seek specific performance who can wait for some years required for final decision in their suits. Moreover, specific performance can be refused on some grounds, especially where personal performance of defendant is sought, or where the performance will demand continuous supervision of the court. There might not be a dramatic rise in the proportion that the number of such suits will bear to the total number of suits filed for enforcing contracts.

However, the burden of showing that the plaintiff is not entitled to specific performance will fall on the defendant, the party whom the court has held to have has refused or broken the contract. The plaintiff will ask for specific performance. The defendant will have available all defences available in suits for enforcement of contracts (Section 9 of the Act), and the grounds on which specific performance can be refused (Section 14 of the Act as amended).

Encourage performance, discourage breach.

The behaviour and approach of contracting parties when the contract comes for performance is dictated by the remedies available, their features and characteristics. When specific performance or injunction are exceptional remedies, a party wanting to break or postpone performance can do so confidently because his liability, if at all, is only to pay amount of money, and that too after a long period of time. He weighs benefit arising from breach against the probable liability of payment after the suit gets finally decided. Where the plaintiff is able to ask for and obtain specific performance, the defendant is compelled to perform, although after some delay. The prospect of such compulsion is likely to deter him from breach. This is the true spirit of the change and the Amendment.

Click here to read or download the Acts:

The Specific Relief Act, 1963, before the amendment of 2018.

The Specific Relief (Amendment) Act, 2018

The Specific Relief Act, 1963, as amended in 2018

The Specific Relief Act, 1963 as amended in 2018, with changes in colour.

The Specific Relief Act, 1963 as amended in 2018, with changes in BW.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s