§359. EFFECT OF ADEQUACY OF DAMAGES

(1) Specific performance or an injunction will not be ordered if damages would be adequate to protect the expectation interest of the injured party.

Comments:

a. Bases for requirement....During the development of the jurisdiction of courts of equity, it came to be recognized that equitable relief would not be granted if the award of damages at law was adequate to protect the interests of the injured party. There is, however, a tendency to liberalize the granting of equitable relief by enlarging the classes of cases in which damages are not regarded as an adequate remedy. This tendency has been encouraged by the adoption of the Uniform Commercial Code, which "seeks to further a more liberal attitude than some courts have shown in connection with the specific performance of contracts of sale. " Comment 1 to Uniform Commercial Code §2-716. In accordance with this tendency, if the adequacy of the damage remedy is uncertain, the combined effect of such other factors as uncertainty of terms, insecurity as to the agreed exchange, and difficulty of enforcement should be considered. Adequacy is to some extent relative, and the modern approach is to compare remedies to determine which is more effective in serving the ends of justice. Such a comparison will often lead to the granting of equitable relief. Doubts should be resolved in favor of the granting of specific performance or injunction. Because the availability of equitable relief was historically viewed as a matter of jurisdic-tion, the parties cannot vary by agreement the requirement of inadequacy of damages, although a court may take appropriate notice of facts recited in their contract.

§360. FACTORS AFFECTING ADEQUACY OF DAMAGES

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.

Comments....

b. Difficulty in proving damages. The damage remedy may be inadequate to protect the injured party's expectation interest because the loss caused by the breach is too difficult to estimate with reasonable certainty....Some types of interests are by their very nature incapable of being valued in money. Typical examples include heirlooms, family treasures and works of art that induce a strong sentimental attachment. Examples may also be found in contracts of a more commercial character.

The breach of a contract to transfer shares of stock may cause a loss in control over the corporation ....The breach of a covenant not to compete may cause the loss of customers of an unascertainable number or importance. The breach of a requirements contract may cut off a vital supply of raw materials. In such situations, equitable relief is often appropriate.

c. Difficulty of obtaining substitute. If the injured party can readily procure by the use of money a suitable substitute for the promised performance, the damage remedy is ordinarily adequate.

Entering into a substitute transaction is generally a more efficient way to prevent injury than is a suit for specific performance or an injunction and there is a sound economic basis for limiting the injured party to damages in such a case. Furthermore, the substitute transaction affords a basis for proving damages with reasonable certainty, eliminating the factor stated in Paragraph (a)....

e. Contracts for the sale of land. Contracts for the sale of land have traditionally been accorded a special place in the law of specific performance. A specific tract of land has long been regarded as unique and impossible of duplication by the use of any amount of money. Furthermore, the value of land is to some extent speculative. Damages have therefore been regarded as inadequate to enforce a duty to transfer an interest in land, even if it is less than a fee simple.....