Study On The Position Of Specific Performance In The Remedy System Of Breach Of Contract

The purpose of remedy under contract law is to attain the goal of the indifference principle. Under the indifference principle, the remedy for breach of contract should make the promisee indifferent between performance and legal relief. If expectation damages can attain the goal, there would be no necessary for specific performance. There are some different ideas on the specific performance. Some scholars have argued that specific performance should be routinely granted. In contrast, other scholars hold that damages under the expectation measure can make the promisee indifferent between performance and legal relief and they embrace the theory of efficient breach. Can the damages attain the goal of indifference principle? Does the specific performance need to be located under the remedy system of contract law? What is the extent of specific performance? The article is divided into four parts to analyze these questions.The first part of the article is the introduction of specific performance. In this part we have used the comparative method to analyze the difference in specific performance between the civil law systems and the Anglo-American law. Under the Anglo-American law, specific performance is an exceptional remedy, to be granted only if damages would not be adequate. Under the civil law systems, specific performance is always routinely granted. But there are still some differences in the same law system.In the second part, the article has analyzed the necessary of specific performance in the remedy system of contract law. At the beginning, we have considered the shortfall of the damage remedy and the false of the theory of efficient breach. We have found that damages under the expectation measure always fall short of making a promisee indifferent between performance and legal relief. When the seller breaches a contract to sell a unique commodity, the buyer can not go into the market and purchase an identical commodity. So the market price which used to measure the loss of the promisee for a unique commodity is typically not a real entity .Rather, it is only a construct. If the buyer's valuation of the commodity exceeds this market-price construct, the damages under the expectation measure will not leave the buyer indifferent between performance and damages. If the contract for the sale of commodity is a long-term supply contract, the damage remedy is also inadequate. And the extent of the damage is always be limited by the principle of foresee ability. Furthermore, the cost of disputy settlement, the time value of lost gains and the risk of the seller's insolvency will make a promisee indifferent between performance and damages. The two basic predicates of the efficient breach are incorrect and the theory of efficient breach does nothing to promote efficient. On the contrary, if widely adopted the theory would promote inefficiency. From what have been discussed, we find that in order to protect the promisee better, the remedy of specific performance is necessary to locate under the remedy system of contract law. Furthermore, specific performance implements both the bargain principle and the indifference principle better than expectation damages.In the third part of the article, we have analyzed the disadvantages of the routine specific performance. Routine specific performance is a highly coercive remedy. Routine specific performance would entail more special problems of error than damage remedy at the enforcement stage and it would bring peculiarly severe consequences. Furthermore, routine specific performance would also conflict with the principle of mitigation and would raise severe problems of opportunism. So routine specific performance would also be undesirable in every case.In the final part of the article, we have used cover to govern the remedy of specific performance. The article has divided specific performance into two kinds: actual specific performance and virtual specific performance. Actual specific performance should be awarded unless the commodity of contract is unique or the contract for the sale of commodity is a long-term supply contract. Because in these cases, the buyers can not go into the market and purchase an identical commodity. In other cases, a promissee can accomplish virtual specific performance if he can readily find in the market a commodity as an equivalent of the breached contract. The buyer can obtain damages because of the cover. The damages are the difference between the cost of cover and the contract price together with any incidential or consequential damages, but less expenses saved in consequence of the seller's breach.Under the virtual specific performance, the buyer may find a replacement performance that, together with the remedy of cover damage, is equivalent to what the buyer would have obtained if the seller had been ordered to actual specific performance. And the virtual specific performance has some substantial advantages over expectation damages and actual specific performance. It can resolve the problems results from the actual specific performance, including the error and difficulty of the enforcement process, the problems of mitigation and opportunism. The buyer will choose the substitute commodity himself, so virtual specific performance can avoid the shortfall that results when the buyer's damages depend on the constructed market price and the damages are often much easier to prove than market-price damages. Furthermore, the act of cover normally prevents or minimizes the social cost of consequential losses. Based on the advantages of the virtual specific performance and cover, the contract law of People's Republic of China should adopt this rule in the future in order to protect the promissee better.Finally, it should indicate that there must also be many defects of this article. However, if it can make more scholars pay more attention to the remedy of specific performance, it will be useful for the protection of the promisee and the integrity of the remedy of contract law.