1. 1 George Mason School of Law Contracts II Specific Performance F.H. Buckley fbuckley@gmu.edu

2. When will specific performance be granted?  And why are money damages the presumptive remedy? 2

3. 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. 3

4. When will specific performance be granted then?  Suppose the parties bargain for specific performance? 4

5. 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 5

6. 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 6

7. 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 7

8. Remedies are meant to avoid economic waste  But just what does that mean? 8

9. Subjective valuation problems  Condition vs Warranties Jacob & Youngs Grun Roofing 9

10. Given subjective valuations, when would the parties bargain for specific performance? 10

11. 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 11

12. 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. 12

13. When would the parties bargain for specific performance?  Why Land: Lucy v. Zehmer at 17 13 “Tis the only thing worth fighting for, worth dying for”

14. When would the parties bargain for specific performance?  Why Land? 14

15. When would the parties bargain for specific performance?  Why Land? Idiosyncratic? 15

16. When would the parties bargain for specific performance?  Why Land? Idiosyncratic? Ease of Enforcement 16

17. When would the parties bargain for specific performance?  Why Land? Idiosyncratic? Ease of Enforcement Ease of renegotiation to a higher-valued third party 17

18. Van Wagner 108 18

19. Van Wagner 108 19  Why didn’t clause 1.05 work?  And why wasn’t specific performance ordered?

20. What about personalty?  On a sale of goods, when can the parties enforce the bargain? 20

21. What about personalty?  On a sale of goods, when can the parties enforce the bargain?  Formerly, special rights when property has passed 21

22. What about personalty?  The UCC unpacks the idea of property and substitutes “identification” 22

23. What about personalty?  After identification Seller’s action for the price Buyer’s action in replevin 23

24. 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. 24

25. 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. 25

26. 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. 26

27. 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. 27

28. 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. 28

29. 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 29

30. 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 30

31. Things of idiosyncratic value: Heirlooms 31 The Pusey Horn

32. Beyond heirlooms?  Sedmak at 880 32 1978 Corvette Pace Car

33. When do damages not suffice?  What kind of a doctor would want seven Corvettes? 33

34. When do damages not suffice?  Was there a contract? 34

35. When do damages not suffice?  Was there a contract?  Deposit paid, sale at MSRP with options  After the changes, dealer to provide a “contract” 35

36. When do damages not suffice?  Ascertained or future goods? 36

37. When do damages not suffice?  What about the Statute of Frauds? 37

38. When do damages not suffice? What about Specific Performance? 38

39. Specific Performance for buyers in UCC § 2-716(1):  Specific performance may be decreed where the goods are unique or in other proper circumstances. 39

40. Specific Performance for buyers in the UCC  Does the UCC expand the availability of SP? Why “other proper circumstances” in Sedmak? 40

41. Specific Performance for buyers in the UCC  Why “proper circumstances” in Sedmak? Limited production and availability problems 41

42. 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? 42

43. 43 George Mason School of Law Contracts II Specific Performance F.H. Buckley fbuckley@gmu.edu

44. A presumptive remedy on the sale of land 44

45. Things of idiosyncratic value: Heirlooms 45 The Pusey Horn

46. 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. 46

47. Prior to identification under UCC § 2-716(1):  Specific performance may be decreed where the goods are unique or in other proper circumstances. 47

48. A more generous interpretation?  Sedmak at 880 48 1978 Corvette Pace Car

49. Klein v. Pepsico 112 49 The Law School’s Gulfstream G-II The “Efficient Breach”

50. Why Pepsico backed out 50 Pepsi Chairman Donald Kendall pours Nikita Khrushchev a Pepsi as Richard Nixon observes greedily, 1959

51. When do damages not suffice?  Klein v. Pepsico Was the plane unique? 51

52. 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? 52

53. When do damages not suffice?  Klein v. Pepsico Is this consistent with Sedmak? 53

54. When do damages not suffice?  Why a different result in King v. Lane at 113 from Klein? 54

55. Special Issues 1.Monetary Specific Performance 2.Marketing Contracts 3.Performance Contracts 4.Personal Services Contracts 55

56. Monetary Specific Performance  Suppose that, in a suitable case for SP, the seller doesn’t deliver but flips the car at a profit 56

57. 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? 57

58. 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? 58

59. Monetary Specific Performance  Bander v. Grossman at 860 59 Aston Martin DB-5

60. 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 60

61. 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? 61

62. 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? 62

63. 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? 63

64. Marketing Contracts  When is a marketing contract a suitable case for SP? 64

65. Marketing Contracts  Playgirl at 862 65 Playgirl Centerfold Winner, former Sen. Scott Brown (R. MA)

66. Marketing Contracts  Was Playgirl unique? Does it “alone and uniquely provides an advertising audience composed of young, malleable and affluent females”? 66

67. 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 67

68. Marketing Contracts  Can you distinguish Playgirl from Davis v. Ziff on 886? 68

69. Personal services contracts 69

70. Personal Service Contracts  Restatement 367(1): A promise to render personal services will not be specifically enforced And why is that? 70

71. Personal Service Contracts  Why no specific performance? Cost of judicial supervision Incentive to underperform Liberty interest (remember non- competes) 71

72. Personal Service Contracts  Beverly Glen v. Warner at 861 72

73. Personal Services Contracts?  How was the application for injunctive relief like SP? 73

74. 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 74

75. Personal Services Contracts http://www.youtube.com/watch?v=iXw9olWJ0Ak 75 Anita Baker

76. Personal Services Contracts?  Why wasn’t Mellon v. Cessna at 861 a personal services contract? 76