Specific Performance and Injunctions: Remedies for Breach of Contract
- 0:05 Equitable Damages
- 2:12 Specific Performance
- 3:57 Injunction
- 7:58 Lesson Summary
When a party breaches a contract, a court will usually award money damages to the innocent party. But there are other types of remedies. Equitable remedies are different than monetary damages. This lesson explains specific performance and injunctions, which are equitable remedies.
A breach of contract is a common type of civil claim. When a court considers a breach of contract case, the court will almost always award money damages to the innocent party. This means that the breaching party is ordered to pay money to the innocent party to make up for the innocent party's losses caused by the breach.
Money damages are a legal remedy. A remedy is any court order that imposes a penalty or enforces a right. Though not common, there are remedies other than legal remedies available for breach of contract.
Equitable remedies are those that are based on what is fair, or seems right, in a particular situation. These remedies were historically designed so that they don't have to follow precedent, or established common laws. Instead, they are purposely intended to be a more flexible option that is used to ensure justice in a particular situation.
These remedies were developed through the old English laws of equity, as used in the historic courts of equity. These courts exclusively granted equitable remedies, and the courts of law granted legal remedies. Eventually, these courts were merged, and legal courts had the authority to grant both types of remedies.
It's helpful to note that equitable remedies are rarely used. These options are only used in cases where money damages are either too difficult to calculate or are inadequate to remedy the harm done to the innocent party. Let's take a closer look at the two main equitable remedies available for breach of contract.
In a breach of contract case, the court can consider ordering specific performance as long as the innocent party asks for that remedy. This equitable remedy orders the breaching party to comply with the terms of the contract. This means that the breaching party will be required to do whatever the party originally promised to do.
The court will consider this option when money damages won't provide the innocent party with adequate compensation for the breach. Specific performance is most common in sales contracts. This remedy is sometimes used when a sales contract involves something unique, such as a particular tract of land, a rare heirloom or a priceless art piece.
Specific performance is best understood by considering an example. Let's say that Arty is an art dealer. He acquires a rare, ancient Egyptian statue that is thought to have belonged to Cleopatra. Andrea collects Egyptian art and makes a sizable offer to buy the piece. Arty agrees, and the two make a valid legal contract.
Arty then decides that he'd rather keep the piece for now. He breaches his contract with Andrea. Andrea sues Arty for breach of contract. The court decides that the piece is truly priceless, and Andrea can't acquire another comparable piece no matter how much money the court awards her. Instead, the court decides that Arty should comply with the terms of the contract, and sell the piece to Andrea for the price she already agreed to pay. This is specific performance.
Another equitable remedy is injunction, which is a remedy that prohibits a party from a particular act. Note that specific performance and injunction remedies are similar, but the key difference is this: specific performance orders a party to do something, and an injunction orders a party not to do something.
Injunctions can be issued as a remedy at the conclusion of a lawsuit, such as a breach of contract claim. This type of injunction is a permanent injunction. Permanent injunctions are issued by a court after hearing a matter, and as a part of the judgment order. A request for injunction can also be filed as its own separate lawsuit. Sometimes a party will file a court request for injunctive relief while the rest of the lawsuit is pending. When the court orders an injunction in this situation, the remedy won't be permanent.
Temporary injunctions are usually enforceable immediately, but last for only a short period of time. A temporary restraining order, or TRO, is a common type of temporary injunction. This remedy is used when a party wishes to halt a particular act for a short period of time, usually while the party prepares a more formal lawsuit. These orders typically last a week or ten days.
A preliminary injunction is a remedy that is also temporary. These injunctions are usually enforceable immediately, but last only until the court can fully hear a matter and make a more permanent decision on the matter. A preliminary injunction lasts longer than a temporary injunction, and is meant to ensure that a party doesn't act on a matter until a court makes a final decision on the issue. Therefore, preliminary injunctions typically only last the duration of a trial or a hearing. Injunctions aren't common, but are used mostly in breach of contract cases.
Like specific performance, the court will consider this option when money damages won't provide the innocent party with adequate compensation for the breach, and the innocent party requests that remedy. Injunctions are used when the object of the contract might be lost, destroyed or otherwise made unavailable to the innocent party.
Let's take another look at our contract between Arty and Andrea, and consider how an injunction might be used. Remember that Arty is an art dealer, and Andrea is a collector who has made a contract with him to buy a rare, ancient Egyptian statue. However, let's say that Alfred, another art collector, learns about the piece and contacts Arty. Alfred asks how much Andrea has offered, and then offers to pay double. Arty agrees and tells Andrea that their contract is off.
Andrea sues Arty for breach of contract. When she files her claim, she asks the court for a preliminary injunction that will keep Arty from selling the piece to Alfred for the time being. The court agrees, and issues an injunction. This court order prohibits Arty from selling the piece until the court can fully hear the matter and make a final decision on it.
After hearing the matter, the court decides that Arty wrongfully breached the contract with Andrea, and that the piece is truly priceless. The court agrees that Andrea can't acquire another comparable piece no matter how much money the court awards her. The court decides that Arty should comply with the terms of his original contract with Andrea. The court orders specific performance. This new court order means that the preliminary injunction will now be lifted, but Arty still can't sell the piece to Alfred, because he is now court ordered to sell it to Andrea.
Let's review. When a court considers a breach of contract case, the court will almost always award monetary damages to the innocent party. However, there are other remedies that a court might consider. Equitable remedies are those that are based on what is fair, or seems right, in a particular situation. These remedies are different than monetary damage awards, and were historically designed so that they don't have to follow precedent. Instead, they are purposely intended to be a more flexible option that is used in order to ensure justice in a particular situation. These options are used only in those cases where money damages are either too difficult to calculate, or are inadequate to remedy the harm done to the innocent party.
There are two main equitable remedies available for breach of contract. Specific performance is a remedy that orders the breaching party to comply with the terms of the contract. An injunction is a remedy that prohibits a party from a particular act. An injunction can be temporary, preliminary or permanent. These two remedies are similar. The main difference is that specific performance orders a party to do something, and an injunction orders a party not to do something.
Chapters in Business 103: Introductory Business Law
- 1. History of American Law (6 lessons)
- 2. Sources of Law (15 lessons)
- 3. Constitutional Law (6 lessons)
- 4. American Legal Systems (13 lessons)
- 5. Legal Procedures (10 lessons)
- 6. Contract Law Basics (19 lessons)
- 7. Capacity in Contract Law (4 lessons)
- 8. Contract Law and Third Party Beneficiaries (3 lessons)
- 9. Contracts: Assignment and Delegation (4 lessons)
- 10. Contracts: Statute of Frauds (7 lessons)
- 11. Contracts: Scopes and Meanings (6 lessons)
- 12. Contracts: Breach of Contract (11 lessons)
- 13. Contracts: Discharge of Contracts (8 lessons)
- 14. The Legal Environment (10 lessons)
- 15. Securities and Antitrust Law (5 lessons)
- 16. Property Law (10 lessons)
- 17. Employment and Labor Law (13 lessons)
- 18. Creditors Rights (4 lessons)
- 19. Product Liability and Consumer Protection (6 lessons)
- 20. International Business Law (4 lessons)
- 21. Torts in Business Law (16 lessons)
- 22. The Role of Agency in Business Law (7 lessons)
- 23. Types of Business Organizations (13 lessons)
- 24. Sales & the Law (11 lessons)
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