george mason school of law

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George Mason School of Law

Contracts II

Specific Performance

F.H. Buckley

fbuckley@gmu.edu

When will specific performance be granted?

And why are money damages the presumptive remedy?

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Restatement § 359(1): The primacy of money damages

Specific performance or an injunction will not be ordered if damages would be adequate to protect the expectation interest of the injured party.

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When will specific performance be granted then?

Suppose the parties bargain for specific performance?

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Equitable remedies are discretionary

The clean hands maxim Restatement 364(1)(a) Specific

performance or an injunction will be refused if such relief would be unfair because the contract was induced by mistake or by unfair practices...or

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Equitable remedies are discretionary

The court’s supervisory power Restatement 365: Specific performance

or an injunction will not be granted if the act or the forbearance … is contrary to public policy

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Equitable remedies are discretionary

Difficulty of enforcement Restatement 366: Where the character

and magnitude of the performance would impose on the court burdens in enforcement or supervision that are disproportionate to the advantage to be gained from enforcement and to the harm that would be suffered by ots denial

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Remedies are meant to avoid economic waste

But just what does that mean?

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Subjective valuation problems

Condition vs Warranties Jacob & Youngs Grun Roofing

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Given subjective valuations, when would the parties bargain for specific performance?

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Given subjective valuations, when would the parties bargain for specific performance?

1. Things of idiosyncratic value to a purchaser Subjective value to Π exceeds market

value Courts would flub subjective value

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When money doesn’t suffice Restatement § 360 In determining whether the

remedy in damages would be adequate, the following circumstances are significant:

(a) the difficulty of proving damages with reasonable certainty,

(b) the difficulty of procuring a suitable substitute performance by means of money awarded as damages, and

(c) the likelihood that an award of damages could not be collected.

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When would the parties bargain for specific performance?

Why Land: Lucy v. Zehmer at 17

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“Tis the only thing worth fighting for, worth dying for”

When would the parties bargain for specific performance?

Why Land?

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When would the parties bargain for specific performance?

Why Land? Idiosyncratic?

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When would the parties bargain for specific performance?

Why Land? Idiosyncratic? Ease of Enforcement

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When would the parties bargain for specific performance?

Why Land? Idiosyncratic? Ease of Enforcement Ease of renegotiation to a higher-valued

third party

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Van Wagner 108

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Van Wagner 108

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Why didn’t clause 1.05 work?

And why wasn’t specific performance ordered?

What about personalty?

On a sale of goods, when can the parties enforce the bargain?

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What about personalty?

On a sale of goods, when can the parties enforce the bargain?

Formerly, special rights when property has passed

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What about personalty?

The UCC unpacks the idea of property and substitutes “identification”

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What about personalty?

After identification Seller’s action for the price Buyer’s action in replevin

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Seller’s action for the price under 2-709(1) When the buyer fails to pay the price as it becomes due

the seller may recover, together with any incidental damages under the next section, the price (a) of goods accepted or of conforming goods lost or

damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and

(b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.

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Seller’s action for the price under 2-709(1) When the buyer fails to pay the price as it becomes due

the seller may recover, together with any incidental damages under the next section, the price (a) of goods accepted or of conforming goods lost or

damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and

(b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.

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Buyer’s action in Replevin: UCC § 2-716(3)

The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered.

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Buyer’s action in Replevin: UCC § 2-716(3)

The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered.

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Buyer’s action in Replevin: UCC § 2-716(3)

The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered.

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So when does identification happen? UCC § 2-501: In the absence of explicit agreement

identification occurs (a) when the contract is made if it is for the sale of goods already existing and identified; (b) if the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers

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So when does identification happen? UCC § 2-501 In the absence of explicit agreement

identification occurs (a) when the contract is made if it is for the sale of goods already existing and identified; (b) if the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers

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Things of idiosyncratic value: Heirlooms

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The Pusey Horn

Beyond heirlooms?

Sedmak at 880

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1978 Corvette Pace Car

When do damages not suffice?

What kind of a doctor would want seven Corvettes?

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When do damages not suffice?

Was there a contract?

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When do damages not suffice?

Was there a contract? Deposit paid, sale at MSRP with options After the changes, dealer to provide a

“contract”

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When do damages not suffice?

Ascertained or future goods?

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When do damages not suffice?

What about the Statute of Frauds?

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When do damages not suffice?

What about Specific Performance?

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Specific Performance for buyers in UCC § 2-716(1):

Specific performance may be decreed where the goods are unique or in other proper circumstances.

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Specific Performance for buyers in the UCC

Does the UCC expand the availability of SP? Why “other proper circumstances” in

Sedmak?

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Specific Performance for buyers in the UCC

Why “proper circumstances” in Sedmak? Limited production and availability

problems

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Specific Performance for buyers in the UCC

Why “proper circumstances” in Sedmak? Limited production and availability

problems Rise in price?

Why wouldn’t cover and damages suffice?

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George Mason School of Law

Contracts II

Specific Performance

F.H. Buckley

fbuckley@gmu.edu

A presumptive remedy on the sale of land

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Things of idiosyncratic value: Heirlooms

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The Pusey Horn

Buyer’s action in Replevin: UCC § 2-716(3)

The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered.

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Prior to identification under UCC § 2-716(1):

Specific performance may be decreed where the goods are unique or in other proper circumstances.

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A more generous interpretation?

Sedmak at 880

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1978 Corvette Pace Car

Klein v. Pepsico 112

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The Law School’s Gulfstream G-IIThe “Efficient Breach”

Why Pepsico backed out

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Pepsi Chairman Donald Kendall pours Nikita Khrushchev a Pepsias Richard Nixon observes greedily, 1959

When do damages not suffice?

Klein v. Pepsico Was the plane unique?

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When do damages not suffice?

Klein v. Pepsico Was the plane unique? What about the price increase?

Could money damages make the Π whole with respect to the price increase?

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When do damages not suffice?

Klein v. Pepsico Is this consistent with Sedmak?

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When do damages not suffice?

Why a different result in King v. Lane at 113 from Klein?

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Special Issues

1. Monetary Specific Performance

2. Marketing Contracts

3. Performance Contracts

4. Personal Services Contracts

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Monetary Specific Performance

Suppose that, in a suitable case for SP, the seller doesn’t deliver but flips the car at a profit

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Monetary Specific Performance

Suppose that, in a suitable case for SP, the seller doesn’t deliver but flips the car at a profit On what theory of remedies is the buyer

entitled to share in the profit?

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Monetary Specific Performance

Suppose that, in a suitable case for SP, the seller doesn’t deliver but flips the car at a profit A suitable case for unjust enrichment?

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Monetary Specific Performance

Bander v. Grossman at 860

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Aston Martin DB-5

Monetary Specific Performance

Bander v. Grossman Purchase price of $40,000 Price at breach of $60,000 Resale for $225,000 Price at trial of $80,000

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Monetary Specific Performance

Bander v. Grossman Purchase price of $40,000 Price at breach of $60,000 Resale for $225,000 Price at trial of $80,000

What does unjust enrichment mean here?

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Monetary Specific Performance

Monetary Specific Performance: Bander v. Grossman Purchase price of $40,000 Price at breach of $60,000 Resale for $225,000 Price at trial of $80,000 Is $20,000 what a court would have

awarded as damages anyway?

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Monetary Specific Performance

Monetary Specific Performance: Bander v. Grossman Purchase price of $40,000 Price at breach of $60,000 Resale for $225,000 Price at trial of $80,000 How would a constructive trust work?

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Marketing Contracts

When is a marketing contract a suitable case for SP?

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Marketing Contracts

Playgirl at 862

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Playgirl Centerfold Winner, former Sen. Scott Brown (R. MA)

Marketing Contracts

Was Playgirl unique? Does it “alone and uniquely provides an

advertising audience composed of young, malleable and affluent females”?

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Marketing Contracts

Was Playgirl unique? Does it “alone and uniquely provides an

advertising audience composed of young, malleable and affluent females”?

The Court: We think there are lots of other magazines that cater to this market

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Marketing Contracts

Can you distinguish Playgirl from Davis v. Ziff on 886?

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Personal services contracts

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Personal Service Contracts

Restatement 367(1): A promise to render personal services will not be specifically enforced And why is that?

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Personal Service Contracts

Why no specific performance? Cost of judicial supervision Incentive to underperform Liberty interest (remember non-

competes)

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Personal Service Contracts

Beverly Glen v. Warner at 861

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Personal Services Contracts?

How was the application for injunctive relief like SP?

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Personal Services Contracts?

How was the application for injunctive relief like SP? Restatement 367(2). A promise to render personal

services exclusively for one employer will not be enforced by an injunction against serving another if its probable result will be to compel a performance involving personal relations the enforced continuance of which … will be to leave the employee without other reasonable means of making a living

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Personal Services Contracts

http://www.youtube.com/watch?v=iXw9olWJ0Ak

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Anita Baker

Personal Services Contracts?

Why wasn’t Mellon v. Cessna at 861 a personal services contract?

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