Specific Relief Act Section 23 — Liquidation of damages not a bar to specific performance

CHAPTER II SPECIFIC PERFORMANCE OF CONTRACTS

General

Summary

A contract that is otherwise suitable for specific performance can still be enforced even if it includes a fixed sum to be paid in case of breach, and even if the defaulting party is willing to pay that sum. This applies only if the court, looking at the contract’s terms and the surrounding circumstances, is satisfied that the sum was meant to secure performance of the contract, not to give the defaulting party a choice to pay money instead of performing. If the court orders specific performance under this rule, it cannot also order payment of that named sum.

Official Text

(1) A contract, otherwise proper to be specifically enforced, may be so enforced, though a sum be named in it as the amount to be paid in case of its breach and the party in default is willing to pay the same, if the court, having regard to the terms of the contract and other attending circumstances, is satisfied that the sum was named only for the purpose of securing performance of the contract and not for the purpose of giving to the party in default an option of paying money in lieu of specific performance.

(2) When enforcing specific performance under this section, the court shall not also decree payment of the sum so named in the contract.