Professors Krawiec and Oman’s insightful new article caught my eye, having myself challenged various contract remedial rules in my research and writing over the years. The title of the Professors’ article made me wonder, however, whether the authors can convince readers that the seemingly inviolate rule against specific performance of personal service contracts should be overturned. But it turns out that the call for specific performance in the article actually applies to a quite limited set of personal service contracts, with the rule against specific performance still governing most such contracts. Despite the title, the authors have a good explanation for why their more narrow thesis is important: Personal service contracts that should be subject to specific performance are “legally and economically significant.” (P. 58.)
Early on, the authors clarify that their goal is to show that specific performance should not be ruled out and the general rules governing equitable remedies should apply if the breaching employee is wealthy, sophisticated, and money damages are incalculable or insufficient to make the employer whole. Further, courts should consider specific performance only when a reasonable substitute employee is not available. In addition, specific performance would only apply if the parties agreed to the remedy in their contract and would never apply if the employee had little bargaining power nor to contracts with at-will employees (the latter for obvious reasons). Finally, the duration of a specific performance order would be limited to one year or less. Thus, the authors would target for specific performance fixed-term contracts between employers and employees such as sports figures, entertainers, and teachers, and even in these instances the typical flexible rules of equitable remedies would apply so that specific performance would not be automatic.
Thus, the force of Krawiec and Oman’s argument is limited in scope, but the categories of personal service contracts that would qualify for specific performance are important, often litigated, and high-stakes, and therefore well-worth their concern. (Part IV of the article presents three helpful examples from actual cases.) Moreover, the lesson of the article is broader than simply advocating for specific performance of certain personal service contracts. The article sends the message that seemingly intractable remedial contract rules can and should be challenged when inefficient and problematic.
In this brief review, I cannot do justice to the authors’ many insights and arguments and I urge people to read the article. But in short, the authors first discuss their view of the advantages of specific performance over existing remedies in the contracts they target, including money damages, which are “often difficult to calculate and under-compensatory” (P. 8), and negative injunctions prohibiting employees from working elsewhere because existing law already bars such injunctions that coerce performance. The authors also point out that many breaching employees in their target group can afford to decline substitute work, so negative injunctions may be worthless. The authors also focus on the special benefits of specific performance, including that employers can invest in their human capital with confidence of an adequate remedy in case of breach.
Assuming money damages are inadequate and negative injunctions are an insufficient solution, the authors still must contend with the traditional reasons for denying specific performance of personal service contracts, including the Thirteenth Amendment’s involuntary servitude prohibition, additional autonomy concerns, and the hurdles to successful judicial monitoring of performance. The authors have reasonable responses to each concern.
The authors first discuss involuntary servitude and the 13th Amendment and conclude in part that “it is very unlikely that specific performance of personal service contracts would run afoul of the original meaning of the 13th Amendment.” (P. 26.) In part, they reason that the employment contracts they have in mind have limited durations, measured obligations, and include compensation. (P. 29.)
Among the authors’ responses to autonomy concerns, they point out that money damages may be large and quite coercive as well. Relatedly, they observe that objections to specific performance often arise because of the substance of the contract, such as a movie star subject to “demeaning conditions.” (P. 34.) In such cases, the authors unsurprisingly do not favor specific performance, but point out that their proposal “is about the remedy that should be available for otherwise unobjectionable contracts.” (P. 34.) And recall that the authors would apply specific performance only when the contract calls for that remedy after breach and when the employee enjoyed equal bargaining power.
Can the judiciary successfully monitor performance, including by an employee whose performance is at best half-hearted? Kraweic and Oman note that contract law already successfully requires evaluation of the quality of performance, for example, in cases involving allegations of bad faith or material breach. The authors also argue that employees’ reputational concerns often will make a perfunctory performance unlikely.
Of course, there are reasonable responses to many of the authors’ arguments. For example, I wonder whether reputational concerns will have much effect on performance when athletes, entertainers, and the like wish they were elsewhere. They might not purposefully breach, but doesn’t effective performance require enthusiasm for what they are doing? In addition, the reader may be uneasy about requiring warring parties to perform their contract. Krawiec and Oman respond in part that courts already order employers to reinstate wrongly fired employees, but it would be helpful to know how that has worked out for both the employer and employee.
I have only scratched the surface of the authors’ arguments that specific performance of personal service contracts should be available in a limited set of circumstances. Although the reader may not agree with all or even many of the arguments, they are worth pondering and the article is well-worth reading!
