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Breach of Contract: Specific Performance

Damages in a breach of contract claim are generally limited to expectancy damages – that is, what the non-breaching party would have received had the contract been performed. See Peterson v. Continental Boiler Works, Inc., 783 S.W.2d 896, 902 (Mo. 1990).  However, in some circumstances, monetary damages just do not suffice in attempting to fully remedy a breach of contract claim. Take, for instance, a scenario in which a real estate purchaser complies with all conditions precedent pursuant to a given real estate contract and the seller, without reasonable cause or excuse, refuses to sell the property. Can the purchaser turn around and sue for breach?

Provided all the elements of a breach of contract are present, the buyer can certainly sue. The more difficult issue will be whether the buyer will elect to pursue legal damages (i.e., money damages) or equitable relief (i.e., specific performance).

Specific performance is governed by equitable principles.  The equitable remedy of specific performance is invoked primarily that complete justice may be done between the parties, and courts will not decree specific performance where it will result in injustice. A greater strength of case is required for a decree of specific performance than to defeat a claim for specific performance.  The equitable remedy of specific performance is not a matter of right but is a remedy applied by courts, depending upon the facts in the particular case. Many established doctrines and principles of equity are available and give direction in determining if the court correctly exercised its discretion in denying plaintiffs/movants/petitioners a decree of specific performance. The common law of Missouri supports the “unclean hands” doctrine and requires that a party coming into a court of equity seeking specific performance must have acted in good faith.

Based on the foregoing, in the above-scenario involving real estate, the purchaser may reasonably pursue a specific performance claim by arguing, among other things, that money damages are inadequate to compensate for the breach (because every parcel of land is unique) and that justice may only be done if the contract is enforced and the transfer is performed. The seller, however, may counter a specific performance suit by arguing a defense such as unclean hands.

In light of the difficulty in electing between legal and equitable relief, it is necessary to consult legal counsel to make an informed decision. Contact us for a free consultation regarding same.

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