Specific Performance of Contract in Bangladesh: Legal Framework, Caution, and Remedies
What is Meant by Specific Performance of Contract?
Specific performance is a legal remedy provided under the Specific Relief Act, 1877, whereby a party to a contract is compelled by a court to perform the exact obligations stated in the agreement. It is a discretionary, equitable relief awarded when compensation in money is inadequate.
At TRW Law Firm, we have handled hundreds of cases where the relief of specific performance was the only way to ensure justice and prevent a grave miscarriage of contractual intentions. As such, parties must be cautious and aware of the law when entering contracts.
What is Meant by Specific Performance?
Specific performance is an equitable relief under civil law. It compels the breaching party to carry out the specific terms of a valid agreement rather than simply pay monetary compensation.
It is a remedy not available by default but granted when ordinary damages are insufficient to make the aggrieved party whole. This remedy is more frequently used in immovable property transactions, trusts, and unique obligations where the object of the contract is irreplaceable.
Specific Performance of Contract Explained
For a suit for specific performance to succeed:
- A valid contract must exist.
- The plaintiff must have fulfilled or be ready to fulfill their part of the contract.
- The relief must be sought within limitation (usually one year).
The Specific Relief Act, 1877 (Sections 12, 21, 21A, and 22) governs the provision.
Contracts without lawful consideration, or entered into under coercion, fraud, misrepresentation, or undue influence are not enforceable.
Where Specific Performance is Allowed (Section 12)
According to Section 12 of the Specific Relief Act, courts may order specific performance in the following scenarios:
a) Act Done in Performance of a Trust
When the contract involves the execution of a trust or part of it, specific performance is almost always granted.
b) No Standard to Ascertain Damages
Where the subject matter is unique, such as a painting by Joynal Abedin, and damages cannot be easily quantified, specific performance is granted.
c) No Adequate Relief in Money
In cases involving sale of immovable property, courts presume that monetary compensation is inadequate.
Example: In Saru Meah Sowdagor vs. Jahanara Begum (8 DLR 616), the court held that breach of a contract for sale of land could not be adequately remedied by money.
d) Pecuniary Compensation Not Sufficient
If the breach cannot be sufficiently compensated monetarily, then the court will enforce specific performance.
When Specific Performance is Not Specifically Enforceable (Section 21)
Not all contracts qualify for specific performance. Section 21 lists exceptions:
a) Adequate Relief Available
If monetary compensation is enough to remedy the breach, courts will not enforce the contract.
Example: If A contracts B to deliver 10 laptops but B refuses, A can be compensated in money. Hence, specific performance won’t be granted.
b) Contracts Not Enforceable by Court
Courts do not enforce contracts that:
- Depend on personal skill (e.g., music performance)
- Involve continuous supervision
- Are too vague or ambiguous
Example: A contract requiring a singer to perform at a concert cannot be enforced.
c) Uncertainty of Contract
If contract terms are ambiguous or not clearly defined, they are void for uncertainty.
Example: An agreement to rent a “furnished house” without specifying furnishings is too vague.
d) Revocable Contracts
Contracts that are by nature revocable cannot be specifically enforced.
e) Ultra Vires Contracts by Trustees
If a trustee acts beyond the power granted, the contract is void.
f) Ultra Vires Acts by Directors or Promoters
If a company director acts outside the company’s Articles or Memorandum of Association, the contract cannot be enforced.
g) Long-Term Continuous Duty
Contracts requiring a continuous act beyond three years cannot be enforced.
Example: If A contracts D to service a car for 10 years post-sale, the continuous duty makes it non-enforceable.
h) Subject Ceased to Exist
If the object of the contract no longer exists, the contract is void.
Example: A ship carrying apples sinks before the contract is executed; hence the contract is unenforceable.
Procedure to Enforce Specific Performance
1. Filing a Civil Suit
- Filed in the appropriate civil court under the Code of Civil Procedure (CPC).
- Plaint must include details of the contract, breach, and relief sought.
2. Limitation Period
- As per Article 113 of the Limitation Act, 1908, the suit must be filed within one year from the date fixed for performance or when the breach is known.
3. Court Fees
- Ad-valorem court fees based on the value of the suit must be paid.
4. Readiness and Willingness
- Plaintiff must prove that they were ready and willing to perform their part of the contract.
5. Notice to Defendant
- Proper notice must be served, and the case proceeds through trial.
Contract to be Registered (Section 21A)
Specific performance for sale of immovable property is allowed only if:
- The contract is in writing and registered under the Registration Act, 1908
- The balance consideration is deposited in court when filing the suit
This provision was added by amendment in 2004, effective from 1st July 2005.
Discretion of the Court (Section 22)
Even if the case qualifies under the law, the grant of specific performance is discretionary.
The court may deny the relief based on its sound judicial conscience. However, the discretion is not arbitrary and must be based on:
- Fairness
- Hardship
- Equitable principles
Consideration for Discretion
The court will examine the following before granting relief:
a) Unfair Advantage
If the plaintiff would get an unfair advantage, relief may be denied.
b) Undue Hardship
If enforcement causes undue hardship to the defendant which was unforeseen, the court may refuse.
c) Substantial Acts by Plaintiff
If the plaintiff has already performed or suffered loss, specific performance is more likely to be granted.
Example: If A was to provide land and B lay tracks in a railway project, and A performs his part, the court may compel B to perform his.
Conclusion
Specific performance is a powerful legal remedy, but one that must be approached with knowledge and caution. Not every breach of contract qualifies for specific enforcement. The nature of the contract, conduct of the parties, availability of damages, and registration status all influence whether the court will grant this relief.
At TRW Law Firm, our expert litigators guide clients through the nuances of contract enforcement under the Specific Relief Act, 1877. We provide comprehensive legal advice, represent clients in high-stakes civil suits, and ensure the interests of our clients are protected with utmost precision.
Facing a breach of contract? Reach out to TRW Law Firm for a strategic consultation.
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