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Specific performance of a contract: what does it mean?

If you enter into a business contract with another entity and some kind of dispute arises involving a breach of that agreement, the dispute may end up being litigated in court. Sometimes in cases like these, a judge may order one party to pay the other damages to compensate for the breach of contract. However, not all cases involve matters that have monetary values that can be easily assessed. If yours is one such case, the judge may order specific performance of the contract. That means that the party who breached the contract must actually take whatever action the agreement required them to do.

As the National Paralegal College points out, specific performance generally does not apply to employment contracts since a party cannot be forced to provide a service. However, it is relevant to many other types of business agreements.

For example, if you enter into a real estate contract to buy property from someone and he or she does something to breach the terms you agreed on, an order for specific performance would require them to complete the sale and deliver title to you. This is because real estate is considered unique since no two properties are exactly alike.

That standard of uniqueness would be applied in other types of cases, as well. Most types of goods are considered common, but products that are custom or rare may be unique. If you ordered a unique product from a seller but did not follow through the purchase, specific performance would allow the seller to collect money from you for its lost profits. On the other hand, if you were to sell a unique product to someone and breach the contract, specific performance would require you to deliver the goods that were promised. This should not be considered legal advice; it is provided as general information on this topic only.

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