Contract Disputes Involving Efforts to Force Compliance: When Specific Performance Is (and Isn’t) a Remedy

If your company is facing a contract dispute involving another party’s failure to uphold its end of the bargain, you will need to decide what type of remedy you want to seek under the circumstances at hand. In some cases, seeking to force compliance—or to compel “specific performance”—might seem like the most desirable option. However, there are a variety of legal and practical considerations involved in seeking specific performance that do not apply to seeking other types of remedies. Learn more from an experienced Miami breach of contract lawyer at Edelboim Lieberman:

3 Types of Potential Remedies in Contract Disputes

Broadly, the types of remedies that are available in breach of contract cases fall into three categories. While not all remedies will be available in all cases, the types of remedies that are generally available include:

• Monetary Damages – Monetary damages compensate contracting parties for their losses resulting from a counterparty’s breach or default. They can be based on a plaintiff’s actual and projected losses, or, in some cases, they can be based on a stipulated liquidated damages amount.
• Injunctive Relief – Injunctive relief prohibits a party from engaging in certain specified acts. For example, if a licensee is using a company’s software in violation of the terms of its license agreement, a court may grant injunctive relief to prohibit (or “enjoin”) the unauthorized use.
• Specific Performance – An award of specific performance compels a party to take action as specified in the award. For example, if a company has a contractual obligation to deliver a highly specialized product and is refusing to do so, an award of specific performance may be appropriate in this scenario.

Of these three potential remedies, specific performance is the least common by fair. While courts are generally willing to award damages when warranted and enjoin defendants from engaging in unlawful or prohibited activities when necessary, they are typically less willing to force defendants to take action against their will. Some of the reasons why courts are often hesitant to award specific performance in commercial contract disputes include:

• Performance is Impossible or Impracticable – While parties may simply refuse to perform in some cases, disputes often arise because performance has become impossible or impracticable. If a defendant cannot feasibly comply with the terms of a contract, then an award of specific performance is only likely to lead to further litigation.
• Good Faith Performance is Unlikely – Even if performance is not impossible or impractical, good faith performance may still be unlikely. If a defendant is capable of performing but has been unwilling to do so to the point that its refusal has resulted in litigation, this can also be a scenario in which an award of specific performance is unlikely to provide a final resolution.
• Damages Are a Sufficient Remedy – Regardless of whether performance is possible, damages may be a sufficient remedy. Not only will damages be sufficient in many cases, but damages awards are also generally easier to enforce than awards of specific performance. This increased likelihood of finality means that damages will be a preferred remedy in many cases.

When Is Specific Performance an Appropriate Remedy?

With this in mind, when is specific performance an appropriate remedy? For the reasons we just discussed, courts tend to award specific performance only when there are no other options available (i.e., when damages are insufficient to make a plaintiff whole). Examples of scenarios in which this may be the case include:

• The parties’ contract involves the sale of a unique piece of real estate or another unique asset; or,
• The parties’ contract involves a unique product or service that the plaintiff can only reasonably obtain from the defendant.

While these are not the only scenarios in which specific performance will be awarded, they are the most common. If you believe that it is in your company’s best interests to seek specific performance (or if you need to know more about the options your company has available), you should consult with an experienced Miami breach of contract lawyer promptly.

What Does the Contract Say?

When deciding what remedies to seek in connection with a commercial contract dispute, it is also important to look at the language of the contract itself. Oftentimes, commercial contracts will include provisions that specify the remedies that are available in the event of a dispute. These provisions are generally enforceable, and if your company has agreed to pursue damages only, then this may be the only option your company has available.

In this same vein, it is important to examine the contract’s other dispute resolution provisions as well. Does the contract call for mandatory mediation or arbitration (or both)? Does it specify where mediation or arbitration will take place? Does it specify that the prevailing party will be entitled to recover its attorneys’ fees? These types of provisions can provide more (or less) leverage in settlement negotiations—and they may help steer the parties toward an amicable resolution that is reasonably satisfactory for both of them.

However, regardless of what the contract says, if your company is in a position to assess whether specific performance is a viable remedy, time could be of the essence. For example, if your company’s losses are adding up or a counterparty isn’t performing because it is in financial straits, taking legal action promptly could be critical for protecting your company’s legal rights. If unnecessary delays contribute to your company’s losses or a counterparty files for bankruptcy before your company takes legal action, this could have adverse consequences regardless of the type of remedy you decide to pursue.

Schedule a Call with a Miami Breach of Contract Lawyer at Edelboim Lieberman

If you need to know more about your company’s legal options related to a commercial contract dispute in Florida, we encourage you to contact us promptly. To schedule a call with an experienced Miami breach of contract lawyer at Edelboim Lieberman as soon as possible, give us a call at 305-768-9909 or tell us how we can reach you online today.