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The pros and cons of specific performance after a contract breach

On Behalf of | Apr 15, 2024 | Business Litigation

Most business owners and executives rely on other professionals, service providers and vendors to operate their company. Typically, they execute contracts with those outside parties as a means of ensuring a consistent stream of materials or the professional assistance that the organization requires to operate profitably.

Unfortunately, not all parties subject to contractual obligations follow through on their promises to others. A breach of contract can cause a variety of challenges for a business. Litigation is sometimes necessary when amicable negotiations can’t resolve a breach of contract issue. There are several different potential solutions to different breach of contract concerns.

Specific performance is one possible solution that can work in certain cases. It entails the judge ordering someone to follow through on their contractual obligations or to correct errors and omissions that deviate from the standard established in the contract.

The benefits of specific performance

Having a judge require that a business or professional follow through on certain responsibilities or deliver materials can help resolve issues at a company. Requesting specific performance can be the best solution in a handful of cases. Perhaps there is no other supplier capable of delivering specific materials, or maybe the amount of research required to identify another suitable professional to perform that role would be costly and time-consuming.

Specific performance can force one party to fulfill contractual obligations that they have previously tried to avoid. An order of specific performance can even lead to a service provider redoing work that did not meet contractual standards. Generally speaking, orders of specific performance put a party in breach of contract at risk of additional consequences, such as contempt of court allegations.

The possibility of court action can quickly lead to compliance from the party in breach of the contract. Such solutions can be expeditious and cost-effective for the organization filing the lawsuit.

The drawbacks of specific performance

One of the most important concerns about specific performance is the limitation of its applicability. For example, employers generally cannot use specific performance to force workers to remain at a company as employees when they have sought a job elsewhere due to at-will employment laws.

The civil courts don’t enforce illegal contract inclusions even if both parties agreed to those terms previously. Additionally, specific performance requires the cooperation of the party already in breach of the contract. They might do the bare minimum when completing a project or provide the lowest quality materials or Goods that they can without violating the order of specific performance. Finally, trying to enforce a contract might permanently alter the working relationship between the two parties.

Those preparing to litigate a contract-related issue on behalf of a business may need to consider the situation very carefully to choose the best solution. Having the right perspective and legal support when litigating a contract issue can make a major difference.