- An accountant sold his well-established accounting practice to a younger colleague. The sale agreement included a covenant stating that the seller would not provide accounting services to any client within a 10-mile radius for five years. One year later, the seller opened a new office just two miles away and began soliciting his former clients. The buyer's revenue dropped significantly. The buyer sued for an injunction to enforce the covenant not to compete.
Answer: The court is likely to grant the injunction because the covenant is ancillary to the sale of a business and reasonable in scope.
Covenants not to compete are specifically enforceable via injunction if they are reasonable and necessary to protect a legitimate business interest. When a covenant is part of the sale of a business, its purpose is to protect the goodwill that the buyer has purchased. A five-year, 10-mile restriction is generally considered reasonable in this context. Because the loss of goodwill is difficult to quantify, money damages are inadequate, making injunctive relief appropriate.
- On May 1, a buyer contracted to purchase a rare, antique clock from a seller for $10,000, with delivery on June 1. On May 15, the seller repudiated the contract. The buyer, an expert in antiques, knew that the market for such clocks was stable and that he had a strong case for specific performance. However, he took no action. In November, the seller, believing the buyer had abandoned his claim, sold the clock to a museum. In December, the buyer finally sued the seller for specific performance.
Answer: The seller will prevail because the buyer's unreasonable delay in filing suit, which prejudiced the seller, gives rise to the defense of laches.
Laches is an equitable defense that bars a claim when a plaintiff has delayed unreasonably in asserting their rights, causing prejudice to the defendant. Here, the buyer waited over six months to sue. This delay was unreasonable, and it prejudiced the seller, who changed his position by selling the clock to a museum in reliance on the buyer's inaction. While impossibility (D) is also a valid defense, laches is the better answer as it focuses on the inequity created by the buyer's delay.
- A homeowner entered into a detailed, 200-page contract with a builder for the construction of a highly complex, custom-designed mansion. The contract specified hundreds of unique materials and building techniques. Midway through the project, the parties had a major disagreement over the interpretation of the blueprints, and the builder quit. The homeowner sued for specific performance, requesting an order that the builder complete the mansion exactly as specified in the contract.
Answer: The court will likely deny specific performance due to the difficulty of supervising the complex construction.
Courts are very reluctant to grant specific performance for complex construction contracts. The primary reason is the impracticality and difficulty of judicial supervision. A court cannot effectively oversee a long-term, complex project to ensure that the work is performed to the quality and specifications required by the contract. While the house is unique and damages may be uncertain, these factors are outweighed by the significant burden of enforcement.
- A professional basketball team signed a star player to a three-year contract that included a clause prohibiting him from playing for any other team during the contract term. In the second year, the player announced his retirement but then immediately signed a more lucrative contract with a rival team. The original team sued, seeking an injunction to prevent the player from playing for the rival team for the remainder of his contract term.
Answer: The court will grant the injunction because the player's services are unique and the contract contained a negative covenant.
While a court will not compel a person to perform a personal service, it may grant a negative injunction to prevent them from working for a competitor if two conditions are met: (1) the services are unique or extraordinary, and (2) the contract contains a negative covenant (an agreement not to perform for others). A star athlete's services are considered unique. Here, the contract had an explicit negative covenant. Therefore, the court is likely to enjoin the player from playing for the competitor.
- A buyer contracted to purchase a one-of-a-kind vintage automobile from a seller. The contract contained a clause stating: 'Should Seller breach this agreement, Seller shall pay Buyer the sum of $20,000 as liquidated damages, which the parties agree is a reasonable estimate of the potential harm.' The seller subsequently breached by refusing to deliver the car. The buyer, who wants the unique car rather than money, sued for specific performance. The seller moved to dismiss, arguing the liquidated damages clause provides the buyer's exclusive remedy.
Answer: The court will grant specific performance because a liquidated damages clause does not preclude it unless designated as the exclusive remedy.
This question tests the relationship between liquidated damages clauses and equitable remedies, specifically whether contractual damage provisions can limit a court's power to grant specific performance.
The correct answer is A because liquidated damages clauses and specific performance serve different purposes and operate independently unless the contract explicitly makes damages the exclusive remedy. Specific performance is an equitable remedy available when legal remedies (money damages) are inadequate, particularly for unique items like one-of-a-kind vintage automobiles. A liquidated damages clause simply establishes the monetary remedy if that route is chosen, but doesn't automatically preclude equitable relief. Courts retain their inherent equitable jurisdiction unless the parties clearly and explicitly waive the right to specific performance.
Option B is wrong because merely agreeing to liquidated damages doesn't constitute an agreement to make that remedy exclusive. The contract would need express language like "sole and exclusive remedy" to bar other relief. Option C incorrectly focuses on the enforceability of the clause—even if the liquidated damages were unenforceable, that wouldn't automatically grant specific performance. The analysis would still center on whether the item is unique and damages inadequate. Option D misunderstands the purpose of liquidated damages clauses, which are typically included to provide certainty and avoid litigation costs, not because parties believe money damages are always adequate.
Remember: liquidated damages clauses don't eliminate equitable remedies unless explicitly stated. When you see unique goods plus liquidated damages, look for clear exclusivity language before ruling out specific performance.
- A buyer and a seller executed a valid land sale contract. Before the closing date, the seller received a higher offer from a third party. The seller accepted the higher offer, immediately transferred the deed to the third party, who paid value and had no knowledge of the prior contract. The third party promptly recorded the deed. The original buyer then learned of the sale and sued the seller for specific performance.
Answer: The court will deny specific performance because the seller has conveyed the property to a bona fide purchaser for value.
This question tests your understanding of specific performance in real estate contracts and how the bona fide purchaser doctrine operates as a defense. When a seller breaches a land sale contract by conveying to another party, you must analyze whether specific performance is still possible and appropriate.
The correct answer is A because once a seller conveys property to a bona fide purchaser for value who takes without notice of prior claims, specific performance becomes impossible. The third party here paid value, had no knowledge of the original contract, and recorded the deed—making them a protected bona fide purchaser. Courts cannot order specific performance when the subject property is no longer available due to such a conveyance, as it would violate the rights of an innocent third party.
Answer B is wrong because courts will not disturb the title of a bona fide purchaser for value who acquired rights without notice of prior claims. This would undermine the security of real estate transactions.
Answer C incorrectly assumes that the buyer's equitable title always trumps subsequent transfers. While the original contract did give the buyer equitable rights, these rights are subject to the seller's ability to convey clear title to good faith purchasers.
Answer D is incorrect because the bona fide purchaser doctrine protects innocent third parties under all recording statutes (race, notice, and race-notice), not just race-notice systems. The type of recording statute affects priority among competing claimants but doesn't eliminate the fundamental protection for bona fide purchasers.
Remember: When specific performance involves real estate already conveyed to an innocent third party, courts will deny the remedy and limit the original buyer to monetary damages.
- A seller contracted in writing to convey a 50-acre property to a buyer. A survey conducted before closing revealed that the seller only possessed marketable title to 45 acres. The remaining five acres belonged to the seller's estranged cousin, who refused to sell her interest. The buyer still wished to proceed with the purchase of the 45 acres. The buyer sued the seller, seeking specific performance.
Answer: The court will grant specific performance for the 45 acres with a proportional abatement of the purchase price.
This question tests your understanding of specific performance remedies when a seller cannot deliver complete marketable title but the buyer wants to proceed anyway.
When a seller cannot convey the exact property described in the contract due to title defects, courts have several options. The key principle here is that if the buyer still wants to purchase the portion the seller can actually convey, and the deficiency isn't substantial, courts will often allow the transaction to proceed with appropriate price adjustments.
The correct answer is D because courts will grant specific performance for partial delivery when: (1) the buyer requests it, (2) the seller can convey marketable title to the available portion, and (3) the court can calculate a fair price reduction. Here, the seller owns 45 of 50 acres (90% of the property), which isn't a substantial deficiency, and the buyer explicitly wants to proceed.
Answer A is wrong because while the seller cannot deliver the full 50 acres, this doesn't automatically bar specific performance when the buyer accepts partial performance with price adjustment. Answer B is incorrect because courts cannot force third parties (the cousin) to sell their property - they lack jurisdiction over her. Answer C misapplies mutual mistake doctrine; there's no indication both parties were mistaken about the title when contracting, and the buyer's willingness to proceed shows no desire to rescind.
Remember: When you see title defect problems, check whether the buyer wants to proceed anyway. If the deficiency is minor and the buyer accepts, courts often allow specific performance with proportional price reduction rather than killing the deal entirely.
- A company paid a developer $50,000 in full, upfront, for a five-year software license and ongoing technical support. The developer delivered the software but then refused to provide any support, breaching the contract. The company sued for specific performance of the technical support provision. The developer argued that specific performance should be denied due to a 'lack of mutuality of remedy,' because a court could not have forced the company to perform its obligation (paying money) through specific performance.
Answer: The developer's argument will fail because the company has already fully performed its contractual obligation.
The modern view on mutuality of remedy does not require that both parties be able to secure specific performance. Instead, it requires that the court be able to ensure that the defendant will receive the counter-performance they bargained for. Here, the company has already fully performed by paying the entire contract price. Thus, there is no risk that the developer will be compelled to perform without receiving the company's performance in return. The developer's argument based on the outdated, strict mutuality rule will fail.
- A prospective buyer of a commercial property falsely informed the owner, an elderly widow with little business experience, that a new environmental regulation was about to be enacted that would require a costly cleanup of the property, making it nearly worthless. In reality, no such regulation was being considered. Relying on this false information, the widow signed a contract to sell the property to the buyer for a fraction of its actual value. Before closing, the widow's son discovered the deception, and the widow refused to sell. The buyer sued for specific performance.
Answer: The court will deny specific performance based on the doctrine of unclean hands.
Specific performance is an equitable remedy, and a plaintiff seeking it must come to the court with 'clean hands.' The doctrine of unclean hands bars a plaintiff who has engaged in misconduct, such as fraud or misrepresentation, in connection with the matter in dispute. Here, the buyer procured the contract through a deliberate and material misrepresentation. This fraudulent conduct taints the transaction and will cause a court of equity to refuse to grant specific performance.
- A high-end restaurant had a long-term written contract to purchase the entire annual output of figs from a specific, small orchard known for a rare and exceptionally flavorful variety. No other orchard in the country grows this particular variety. In the third year of the contract, the orchard owner received a substantially higher offer from a foreign buyer and repudiated the contract with the restaurant. The restaurant sued for specific performance.
Answer: The court will likely grant specific performance because the figs are effectively unique and cover is not reasonably available.
Under the UCC, specific performance may be granted where goods are unique or in other proper circumstances. While figs are generally not unique, the figs from this specific orchard—a rare and exceptionally flavorful variety that cannot be obtained elsewhere—are effectively unique for the restaurant's purposes. Because the restaurant cannot 'cover' by purchasing these specific figs elsewhere, its legal remedy of damages is inadequate, and specific performance is appropriate.
- An aunt promised her nephew in a signed writing that if he quit his job and cared for her full-time for the rest of her life, she would leave her home to him in her will. The nephew performed as agreed for five years. The aunt then had a disagreement with the nephew, told him she was revoking her will, and ordered him to leave. The nephew, while the aunt is still alive, sued for specific performance, asking the court to order the aunt to execute a new will naming him as the beneficiary of the house.
Answer: The court will deny specific performance because a will is freely revocable by the testator until death.
This question tests the intersection of contract law and wills/estates law, specifically whether courts can enforce contracts that attempt to control the distribution of property at death.
The correct answer is D because wills are inherently revocable instruments until the testator's death. This is a fundamental principle of wills law - a person cannot irrevocably commit to leaving property to someone in a will while still alive. Even though the aunt made a contractual promise, courts cannot order specific performance of creating or maintaining a will because doing so would violate the testator's absolute right to revoke or modify their will at any time before death.
Let's examine why the other options fail: A is incorrect because full performance by one party doesn't automatically guarantee specific performance when the remedy would violate fundamental legal principles. The nephew's performance doesn't override the aunt's right to control her will. B misapplies the uniqueness doctrine - while land is indeed unique and typically supports specific performance in ordinary real estate contracts, this doesn't apply when the transfer mechanism (a will) is legally revocable. C overstates the law - contracts concerning inheritance aren't automatically against public policy, but enforcing them through specific performance of will creation is problematic for different reasons.
Study tip: Remember that wills law principles can override contract remedies. When you see a question involving promises to leave property in a will, immediately consider whether the requested remedy conflicts with the fundamental rule that wills remain revocable until death. Contract performance doesn't trump testamentary freedom.
- In a contract for a house sale, which parties may seek specific performance?
Answer: Either party; land is unique.
Land is considered unique, so money damages don't adequately protect either side. A buyer can force the seller to convey the property, and a seller can force the buyer to complete the sale. The tempting mistake is thinking only the buyer needs the land, but the seller's interest is also tied to this specific parcel.
- Buyer cannot cover standardized steel because a strike halts supply. Specific performance?
Answer: Yes; cover is impossible here.
Because a strike leaves you unable to cover the standardized steel, this qualifies as other proper circumstances for specific performance under UCC 2-716 even though the steel isn't unique. The tempting mistake is focusing on uniqueness alone; uniqueness is one route, but impossibility of cover is another. Thus yes, specific performance is available.
- Your client's father, a famous novelist, sold the original, hand-annotated manuscript for his most celebrated novel to a collector. Before the manuscript could be delivered, the novelist unexpectedly passed away. Your client, the sole heir, has immense sentimental attachment to the manuscript and wants it back. The collector, who paid fair market value, insists on delivery. Your client has offered to return the payment and pay additional damages, but the collector refuses and has sued for specific performance.
Answer: The collector is likely to obtain specific performance because the manuscript is a unique good with no available substitute.
Specific performance is awarded when the subject matter of the contract is unique. An original, annotated manuscript by a famous author is unquestionably unique. The collector's right to specific performance vested when the contract was formed. While your client's sentimental attachment is understandable, it does not create a legal basis to defeat the collector's valid contractual right to this unique item. The novelist's death does not terminate the contractual obligation of his estate.
- An elderly farmer agreed to sell a five-acre strip of his land to a neighboring factory for the construction of a new loading dock. The price was fair. Unknown to both parties at the time of contracting, the underground aquifer that supplied the only well for the farmer's home and livestock was located entirely beneath this five-acre strip. Construction of the loading dock would destroy the well and render the rest of the farm uninhabitable. Upon discovering this, the farmer refused to close. The factory sued for specific performance.
Answer: The farmer will likely defeat specific performance on the grounds of undue hardship.
A court of equity may refuse to grant specific performance if enforcing the contract would cause undue hardship to the defendant that is disproportionate to the benefit the plaintiff would receive. Forcing the sale would deprive the farmer of the only water source for his home and farm, a devastating consequence. While mutual mistake (B) is also a strong argument for rescission, undue hardship is the most direct equitable defense against the specific remedy of specific performance.
- A prestigious orchestra entered into a two-year employment contract with a world-renowned conductor. The contract gave the conductor full artistic control over the orchestra's season. Six months into the contract, the conductor accepted an offer from a rival orchestra in another city and announced her intention to leave. The orchestra sued the conductor, seeking an order of specific performance to compel her to complete the remaining term of her contract.
Answer: The court will likely deny specific performance because it would constitute involuntary servitude and be difficult for the court to supervise.
Courts will not grant specific performance for personal services contracts. There are two primary reasons for this rule. First, compelling a person to perform a service against their will raises concerns of involuntary servitude under the Thirteenth Amendment. Second, it is impractical and undesirable for a court to supervise the performance to ensure it meets the contract's standards. Even though the conductor's services are unique, the court will not order her to continue working.
- A biotechnology firm contracted to purchase a specialized gene-sequencing machine from a manufacturer for $1 million. The machine was custom-configured for the firm's proprietary research process. The manufacturer repudiated the contract to accept a more lucrative government contract. Due to a global shortage of key components, no other manufacturer can produce a comparable machine for at least 24 months. The firm's research, which is time-sensitive, will be irreparably harmed by the delay, likely causing the failure of the entire project. The firm sued for specific performance.
Answer: Specific performance will be granted because the firm's inability to cover creates 'other proper circumstances' under the UCC.
Under UCC § 2-716, specific performance is available for the sale of goods not only when the goods are unique, but also in 'other proper circumstances.' The inability of a buyer to 'cover' by purchasing substitute goods on the market is a classic example of such circumstances. Here, because no other manufacturer can supply a similar machine for 24 months, the firm cannot reasonably cover. This makes specific performance an appropriate remedy to prevent irreparable harm to the firm's research project.
- A large bakery contracted to buy 50,000 pounds of all-purpose flour from a supplier at a set price. Subsequently, a poor wheat harvest caused the market price of flour to increase by 50%. The supplier refused to deliver the flour, breaching the contract. The bakery was able to purchase the same quantity and quality of flour from another supplier, although it had to pay the higher market price. The bakery sued the original supplier for specific performance to compel delivery at the contract price.
Answer: The court will deny specific performance because the flour is a fungible good and the bakery was able to cover.
Specific performance is not an available remedy for breach of a contract for the sale of fungible goods that are readily available on the open market. All-purpose flour is a classic example of a fungible good. The bakery was able to 'cover' by purchasing substitute flour from another source. Its remedy is legal, not equitable: the bakery can sue for money damages, measured as the difference between the contract price and the cover price.
- The founder of a privately held technology startup entered into a written agreement to sell her 25% ownership stake to an investor for $1 million. The startup's shares are not traded on any public exchange, and their value is highly speculative. Before the sale closed, the startup announced a major technological breakthrough. The founder, believing her shares were now worth far more, repudiated the agreement. The investor sued for specific performance.
Answer: The court will likely grant specific performance because the stock is from a closely held corporation and its value is not readily ascertainable.
While money damages are typically adequate for breach of a contract to sell publicly traded securities, specific performance is often granted for contracts involving the stock of a closely held corporation. This is because the shares are not available on the open market, and their value is difficult to determine with any certainty, making money damages an inadequate and speculative remedy. The court will enforce the contract as written, not reform the price.
- A landowner and a developer entered into a written contract for the sale of a 10-acre parcel of undeveloped land for $500,000. The contract required the developer to pay a $25,000 earnest money deposit within five business days. The developer, distracted by another project, paid the deposit on the sixth business day. The landowner accepted and deposited the check without comment. A week later, before the closing date, a corporation offered the landowner $750,000 for the same parcel. The landowner accepted the new offer and informed the developer that their original contract was terminated due to the late deposit. The developer sued for specific performance.
Answer: The court will likely grant specific performance because the land is unique and the landowner waived the developer's minor breach.
Specific performance is the presumptive remedy for a breach of a contract for the sale of land because each parcel of land is considered unique. The developer's one-day delay in paying the earnest money deposit was a minor breach. By accepting and depositing the late payment without objection, the landowner waived the condition that payment be made within five days. Therefore, the landowner cannot use this minor, waived breach to escape the contract. The developer is entitled to an order compelling the landowner to sell the property under the original contract terms.
