Legal Definitions - mutuality of remedy

Mutuality of remedy refers to a principle in contract law, particularly relevant when a court is asked to order "specific performance." This principle suggests that if one party to a contract can ask a court to compel the other party to fulfill their contractual obligations (specific performance), then the other party must also be able to seek the same type of remedy against the first party.

In essence, for a court to grant specific performance to one side, it often requires that the same remedy would theoretically be available to the other side if they were the one seeking it. This ensures fairness and balance in the court's ability to enforce contracts through non-monetary orders, especially when the subject of the contract is unique or irreplaceable.

• Example 1: Real Estate Purchase

  Imagine a buyer (Party A) enters into a contract to purchase a specific, unique piece of land and a house from a seller (Party B). If Party B later decides not to sell, Party A might sue for specific performance, asking the court to compel Party B to transfer the property as agreed. The principle of mutuality of remedy would consider whether, if Party A had instead breached the contract by refusing to buy, Party B could also have sued for specific performance to compel Party A to complete the purchase and pay the agreed price. Since real estate is considered unique, courts typically find that specific performance is available to both buyers and sellers, thus satisfying the mutuality requirement.

• Example 2: Custom-Built Machinery

  A manufacturing company (Client) contracts with a specialized engineering firm (Developer) to design and build a highly customized, one-of-a-kind machine essential for the Client's unique production process. If the Developer breaches the contract by refusing to complete and deliver the machine, the Client might seek specific performance, arguing that no other firm could build this exact, critical piece of equipment. For the court to grant this, it would typically assess whether, if the Client had breached by refusing to accept or pay for the completed, unique machine, the Developer could also have sought specific performance to compel the Client to accept the machine and pay the agreed price. If the machine is truly unique and has no other market, mutuality of remedy would likely be satisfied.

• Example 3: Exclusive Supply of a Rare Material

  A jewelry designer (Buyer) enters into a long-term contract with a small, independent mine (Supplier) for the exclusive supply of a rare, uniquely colored gemstone that is crucial for the designer's signature collection. If the Supplier breaches by refusing to deliver the gemstones, the Buyer might seek specific performance, as these particular stones are not available from any other source. The principle of mutuality of remedy would then consider whether, if the Buyer had breached by refusing to purchase the gemstones, the Supplier could also have sought specific performance, compelling the Buyer to take delivery and pay. If the gemstones are so unique that the Supplier would have no other market for them, the court might find that specific performance is mutually available, ensuring fairness in enforcing the exclusive supply agreement.