Commercial Division Blog

Posted: July 7, 2019 / Categories Commercial, Contracts

Court Grants Specific Performance of Contract Because of Difficulty in Enforcing Judgment on Defendants' Foreign Assets

On June 19, 2019, Justice Sherwood of the New York County Commercial Division issued a decision in Crede CG III, Ltd. v. Tanzanian Gold Corp., 2019 NY Slip Op 31763(U), granting specific performance of a contract because of the difficulty of enforcing a money judgment on the foreign defendant's assets, explaining:

The party seeking specific performance of a contract must show that it performed its contractual obligations, that the other party was was to perform its part, and that there is no adequate remedy at law. Money damages are regarded as an inadequate remedy at law when money cannot provide the benefits that the injured party expected to derive from the contract. This may occur where the subject matter of the particular contract is unique and has no established market value.

Crede claims the remedy at law, money damages, is insufficient, as it is undisputed that TGC's assets are either ephemeral or located in Tanzania, which does not honor United States judgments. The decision whether or not to award specific performance is one that rests in the sound discretion of the trial court. In general, specific performance is appropriate when money damages would be inadequate to protect the expectation interest of the injured party and when performance will not impose a disproportionate or inequitable burden on the breaching party. Traditionally, specific performance has been held to be a proper remedy in actions for breach of contract for the sale of real property or when the uniqueness of the goods in question makes calculation of money damages too difficult or too uncertain. Similarly, agreements to convey shares of stock in a close corporation may be enforced by specific performance, as may an agreement to sell shares in a cooperative real estate corporation. The trial court must determine, in the first instance, whether money damages would be an adequate remedy by considering, among other factors, the difficulty of proving damages with reasonable certainty and of procuring a suitable substitute performance with a damages award.

Given the acknowledged ineffectiveness of this court's judgment in obtaining relief in Tanzania. where TGC's assets reside, the remedy at law of a money judgment will be inadequate. Specific performance, ordering TGC to provide the stock demanded pursuant to Crede's exercise of the Warrants, is appropriate.

(Internal quotations and citations omitted).

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