8/10/2019 Equity and Trust Assignment

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EQUITY AND TRUST ASSIGNMENT

APPLICATIONS OF SPECIFIC PERFOMANCE

1.

Where the contract is to pay money to a third party

Specific performance will be enforced where damages awarded will probably be nominal.

In the case of Beswick v Beswick , The agreement was that Peter Beswick assigned his business to his

nephew in consideration of the nephew employing him for the rest of his life and then paying a weekly

annuity to Mrs Beswick. Since the latter term was for the benefit of someone not party to the contract,

the nephew did not believe it was enforceable and so did not perform it, making only one payment of

the agreed weekly amount of 5 pounds.

The nephew argued that as Mrs Beswick was not a party to the contract, she was not able to enforce it

due to the doctrine of privity of contract . It was held that she was entitled, at least as

administratrix, to specific performance , because the damages were nominal. She had no other

effective remedy, since an award of the same would have resulted into a loss of contractual benefit for

Mrs. Beswick.

2. Where there is contract for secured mortgage and money is lent before the mortgagor

excecutes the mortgage instrument

The mortgagee can hence obtain a court order ordering the mortgagor to excecute the instrument.

Usually the banks will rely on the loan agreement as there is a clause in the loan agreement that the

mortgagor when called upon to do so by the mortgagee shall sign the mortgage. Default therefore onthe part of the mortgagor cannot therefore be counternanced and specific performance hence will be

ordered as against him.

3. Where a contract is with a company to take up and pay for debentures

It is unlikely that a borrower would not draw down the loan having gone on to the trouble of arranging

it. Should this occur, it would be a matter of construction to determine whether the borrower was

obliged to draw down or had simply acquired an option to do so. Even if the borrower is in breach of

contract in accordance with the general principle that specific performance of contracts to lend money

will not be ordered, the lenders remedy will lie only in damages and these are likely to be minimal.