Contracts are Not Specifically Enforceable

Contracts form the backbone of any commercial relationship and everyday transactions. While most contracts are performed voluntarily by the parties, sometimes disputes arise, and parties approach the courts to seek remedies for breach of contract. The two main remedies available for breach of contract in India are (1) compensation or damages, and (2) specific performance.

Specific performance is a unique remedy where the court orders the defaulting party to carry out the contract as agreed, rather than merely paying monetary damages. However, the law does not grant specific performance in every case. The Specific Relief Act, 1963 clearly outlines the contracts that are not specifically enforceable. Understanding these exceptions is crucial for legal practitioners, businesses, and individuals entering into contracts.

This article explains which contracts are not specifically enforceable in India, with relevant illustrations, case law, and practical implications.

Legal Framework: Section 14 of the Specific Relief Act, 1963

Section 14 of the Specific Relief Act, 1963 (as amended in 2018) lays down the contracts that cannot be specifically enforced. According to Section 14(1), the following contracts are not specifically enforceable:

1. Where a party has obtained substituted performance under Section 20;
2. Where the contract involves continuous duty which the court cannot supervise;
3. Where the contract depends on the personal qualifications of the parties;
4. Where the contract is, by its nature, determinable.

Let us examine each category in detail.

Contracts Where Substituted Performance Has Been Obtained

Section 20 of the Specific Relief Act provides for “substituted performance”. If a party to a contract commits a breach, the aggrieved party may get the contract performed by a third party or by their own agency and recover the expenses from the defaulting party.

If substituted performance has already been obtained, the law does not allow the aggrieved party to seek specific performance again. This prevents double recovery and ensures that the remedy is not abused.

Illustration

Suppose A contracts with B to construct a house. A fails to perform the work. B then gets the house constructed by another contractor C and recovers the costs from A. After getting the work done, B cannot file a suit for specific performance against A for the same contract.

Contracts Involving Continuous Duty Which the Court Cannot Supervise

Contracts that require ongoing, repeated, or continuous performance from one or both parties fall in this category. The courts are not equipped to supervise performance over a prolonged period.

Judicial machinery cannot be expected to monitor the day-to-day or ongoing compliance of such obligations. Enforcing such contracts would be practically impossible and would lead to unnecessary litigation.

Illustration

A contract for maintaining a park for five years, or a contract for operating a factory for a continuous period, involves continuous duties. The court cannot supervise whether the park is maintained every day or whether the factory operates as per terms on a daily basis.

Contracts Depending on Personal Qualifications of the Parties

Contracts which require the unique skills, expertise, or personal qualifications of one or more parties fall in this category. The essence of these contracts lies in the personal capability of a particular individual.

No court can compel a person to perform an act that requires their unique skill, talent, or judgment. Even if the party fails, the court can only award damages and not force the specific act.

Illustration

If an artist agrees to paint a portrait for a client, but refuses to perform, the client cannot force the artist to paint. The court cannot ensure quality or creativity, which is highly personal.

Contracts Which Are, by Nature, Determinable

A determinable contract is one which can be terminated by either party, either by notice or as per the terms agreed. Such contracts are not suitable for specific performance as they can be ended at will.

If the contract can be ended by notice, then granting specific performance is meaningless. The party may comply one day and terminate the contract the next.

Illustration

A partnership at will can be dissolved by any partner by giving notice. Thus, one partner cannot force others to continue the business through a suit for specific performance.

Key Points Summarised

Table: Contracts Not Specifically Enforceable

Conclusion

The Specific Relief Act, 1963, makes it clear that not every contract can be enforced specifically. Section 14 acts as a safeguard, preventing the misuse of the remedy of specific performance where it is either impossible or impractical for courts to ensure compliance. By restricting specific performance in cases of substituted performance, continuous duties, personal qualifications, and determinable contracts, the law maintains a balance between enforcing contractual rights and avoiding judicial overreach.