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

Specific Performance a discretionary Equitable Remedy 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

Sanctity of Contract? Suppose the parties bargain for specific performance?

Specific Performance a discretionary Equitable Remedy Money damages the presumptive remedy 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 its denial

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 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.

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.

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

Leaseholds: Van Wagner 108

Leaseholds: Van Wagner 108 Why didn’t clause 1.05 work?

Leaseholds: Van Wagner 108 Why wasn’t specific performance ordered?

Leaseholds: Van Wagner 108 Why wasn’t specific performance ordered? Physical difference ≠ economic interchangeability Leasehold vs. Title

Leaseholds: Van Wagner 108 Why wasn’t specific performance ordered? SP would be inequitable to the lessor And why was that? “Unreasonable hardship” to lessor and unreasonable benefit to lessee

Leaseholds: Van Wagner 108 Why wasn’t specific performance ordered? Availability of evidence as to damages What if they had been difficult to calculate?

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.

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

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 contract if the seller is 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 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 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

Before identification? 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 the car ever identified to the contract?

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 buyers in the UCC Why “proper circumstances” in Sedmak? Limited production and availability problems 32

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? 33

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.

When money doesn’t suffice Restatement § 360 In determining whether the remedy in damages would be adequate, the following circumstances are significant: (b) the difficulty of procuring a suitable substitute performance by means of money awarded as damages, Triple A Baseball at 859.

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?

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?

Marketing Contracts Playgirl at 862 Playgirl Centerfold Winner, former Sen. Scott Brown (R. MA)

Marketing Contracts Was Playgirl unique? Does it “alone and uniquely provides an advertising audience composed of young, malleable and affluent females”?

Marketing Contracts Was Playgirl unique? Does it “alone and uniquely provides an advertising audience composed of young, malleable and affluent females”? The Court: We think there are lots of other magazines that cater to this market

Marketing Contracts Can you distinguish Playgirl from Gold v. Ziff on 862? A 1989 case

Personal services contracts

Personal Service Contracts Restatement 367(1): A promise to render personal services will not be specifically enforced And why is that?

Personal Service Contracts Why no specific performance? Cost of judicial supervision Incentive to underperform Liberty interest (remember non-competes)

Personal Service Contracts Beverly Glen v. Warner at 861

Personal Services Contracts? How was the application for injunctive relief like SP?

Personal Services Contracts? How was the application for injunctive relief like SP? Restatement 367(2). A promise to render personal services exclusively for one employer will not be enforced by an injunction against serving another if its probable result will be to compel a performance involving personal relations the enforced continuance of which … will be to leave the employee without other reasonable means of making a living

Personal Services Contracts http://www.youtube.com/watch?v=iXw9olWJ0Ak Anita Baker