George Mason School of Law

George Mason School of Law Contracts II Specific Performance F.H. Buckley fbuckley@gmu.edu

When will specific performance be granted? • And why are money damages the presumptive remedy?

Restatement § 359(1): The primacy of money damages • Specific performance or an injunction will not be ordered if damages would be adequate to protect the expectation interest of the injured party.

When will specific performance be granted then? • Suppose the parties bargain for specific performance?

Equitable remedies are discretionary • The clean hands maxim • Restatement 364(1)(a) Specific performance or an injunction will be refused if such relief would be unfair … • Restatement 365: Specific performance or an injunction will not be granted if the act or the forbearance … is contrary to public policy

Equitable remedies are discretionary • Difficulty of enforcement • Restatement 366: Where the character and magnitude of the performance would impose on the court burdens in enforcement or supervision that are disproportionate to the advantage to be gained from enforcement and to the harm that would be suffered by ots denial

When money doesn’t suffice • Restatement § 360 In determining whether the remedy in damages would be adequate, the following circumstances are significant: • (a) the difficulty of proving damages with reasonable certainty, • (b) the difficulty of procuring a suitable substitute performance by means of money awarded as damages, and • (c) the likelihood that an award of damages could not be collected.

Subjective valuation problems • Things of idiosyncratic value to a purchaser • Subjective value to Π exceeds market value • Courts would flub subjective value

Things of idiosyncratic value: Heirlooms The Pusey Horn

Things of idiosyncratic value: Land • Why Land? • Lucy v. Zehmer

Subjective valuation problems • Why Land? • Idiosyncratic?

Subjective valuation problems • Why Land? • Idiosyncratic? • Ease of Enforcement

Subjective valuation problems • Why Land? • Idiosyncratic? • Ease of Enforcement • Ease of renegotiation to a higher-valued third party

Leaseholds: Van Wagner 108

Leaseholds: Van Wagner 108 • Why didn’t clause 1.05 work? • And why wasn’t specific performance ordered?

Leaseholds: Van Wagner 108 • Why didn’t clause 1.05 work? • And why wasn’t specific performance ordered? • Physical difference ≠ economic interchangeability

What about personalty? • On a sale of goods, when can the parties enforce the bargain?

What about personalty? • On a sale of goods, when can the parties enforce the bargain? • Formerly, special rights when property has passed

What about personalty? • The UCC unpacks the idea of property and substitutes “identification”

What about personalty? • Specific Performance: • Seller’s action for the price • Buyer’s action in replevin

Seller’s action for the price under 2-709(1) • When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price • (a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and • (b) of goods identified to the contractif the selleris unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.

Buyer’s action in Replevin: UCC § 2-716(3) • The buyer has a right of replevin for goods identified to the contractif after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered.

So when does identification happen? UCC § 2-501: • In the absence of explicit agreement identification occurs (a) when the contract is made if it is for the sale of goods already existing and identified; (b) if the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers

So when does identification happen? UCC § 2-501 • In the absence of explicit agreement identification occurs (a) when the contract is made if it is for the sale of goods already existing and identified; (b) if the contract is for the sale of future goods… when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers

Beyond heirlooms? • Sedmak at 857 1978 Corvette Pace Car

When do damages not suffice? • What kind of a doctor would want seven Corvettes?

When do damages not suffice? • Was there a contract? • Oral only

When do damages not suffice? • Was there a contract? • Deposit paid, sale at MSRP with options • After the changes, dealer to provide a “contract”

When do damages not suffice? • Was the car identified to the contract?

Buyer’s action in Replevin: UCC § 2-716(3) • The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered.

So when does identification happen? UCC § 2-501 • In the absence of explicit agreement identification occurs (a) when the contract is made if it is for the sale of goods already existing and identified; (b) if the contract is for the sale of future goods … when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers

When do damages not suffice? • What about specific performance?

Specific Performance for buyers in UCC § 2-716(1): • Specific performance may be decreed where the goods are unique or in other proper circumstances.

Specific Performance for buyers in the UCC • Does the UCC expand the availability of SP? • Why “other proper circumstances” in Sedmak?

Specific Performance for buyersin the UCC • Why “proper circumstances” in Sedmak? • Limited production and availability problems 35

Specific Performance for buyers in the UCC • Why “proper circumstances” in Sedmak? • Limited production and availability problems • Rise in price? • Why wouldn’t cover and damages suffice? 36

Klein v. Pepsico 112 The Law School’s Gulfstream G-II The “Efficient Breach”

When do damages not suffice? • Klein v. Pepsico • Was the plane unique?

When do damages not suffice? • Klein v. Pepsico • Was the plane unique? • What about the price increase? • Could money damages make the Π whole with respect to the price increase?

When do damages not suffice? • Klein v. Pepsico • Is this consistent with Sedmak?

When do damages not suffice? • Why a different result in King v. Lane at 113 from Klein?

Special Issues • Monetary Specific Performance • Marketing Contracts • Personal Services Contracts

Monetary Specific Performance • Suppose that, in a suitable case for SP, the seller doesn’t deliver but flips the car at a profit

Monetary Specific Performance • Suppose that, in a suitable case for SP, the seller doesn’t deliver but flips the car at a profit • On what theory of remedies is the buyer entitled to share in the profit?

Monetary Specific Performance • Suppose that, in a suitable case for SP, the seller doesn’t deliver but flips the car at a profit • A suitable case for unjust enrichment?

Monetary Specific Performance • Bander v. Grossman at 860 Aston Martin DB-5

Monetary Specific Performance • Bander v. Grossman • Purchase price of $40,000 • Price at breach of $60,000 • Resale for $225,000 • Price at trial of $80,000

Monetary Specific Performance • Bander v. Grossman • Purchase price of $40,000 • Price at breach of $60,000 • Resale for $225,000 • Price at trial of $80,000 • What does unjust enrichment mean here?

Monetary Specific Performance • Monetary Specific Performance: Bander v. Grossman • Purchase price of $40,000 • Price at breach of $60,000 • Resale for $225,000 • Price at trial of $80,000 • Is $20,000 what a court would have awarded as damages anyway?

Marketing Contracts • When is a marketing contract a suitable case for SP?

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