Thursday, August 13, 2009

Marsh on Blackacre and Widgets: "Rethinking Commercial Real Estate Contract Remedies"

Tanya D. Marsh of Indiana University's Kelley School of Business has just posted "Sometimes Blackacre is a Widget: Rethinking Commercial Real Estate Contract Remedies," on ssrn.  Marsh's abstract is:

This Article argues that the presumption that all land is unique, a principle so embedded in the common law that it is “settled beyond the need for citation,” is wrong. The “uniqueness doctrine” is used to justify granting non-breaching purchasers of real property nearly automatic access to the remedy of specific performance without requiring a wronged party to prove that it has no adequate remedy at law. This powerful common law protection for non-breaching purchasers evolved for a variety of social and economic reasons. This Article makes the case that these historical reasons do not support the applicability of the uniqueness doctrine to modern commercial real estate transactions. Despite the illegitimacy of the uniqueness doctrine, this Article argues that allowing the parties to commercial real estate contracts to bargain for equitable relief is not only desirable, but consistent with legitimate doctrine, practical concerns, and the property rule/liability rule paradigm described by Professors Calabresi and Melamed. The instability of the uniqueness doctrine poses an immediate practical problem – any sudden change would cause significant problems and increased costs for the already-troubled $6.5 trillion American commercial real estate sector. This Article proposes that acknowledging the illegitimacy of the uniqueness doctrine is essential to preserving and enhancing the remedies regime relied upon by the industry.

I think you'll enjoy this. 

Al Brophy

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Twelve years ago, the Supreme Court of Canada held in Semelhago v Paramadevan [1996] 2 SCR 415 (available at that the presumption that all land is unique was wrong. This was an abrupt departure from the traditional English approach to the availability of specific performance; the issue had not even been argued by counsel. Applied subsequently by lower courts to both commercial and residential real estate, the new test is the following: "Specific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available" (Semelhago at para. 22). Most lower court decisions have recognized that the test is a question of fact to be decided on the particular circumstances. The sudden change did not cause significant problems, although it did cause some unforeseen problems in the western provinces with Torrens systems. In the spring of this year, the problems were deemed significant enough to attract the attention of the Alberta Law Reform Institute, which published a Report for Discussion No. 21 (available at, proposing that a purchaser under a contract for the sale and purchase of land who has discharged their obligations under the contract, or is ready, willing and able to do so, should generally be entitled to specific performance, whether or not the land is unique.

Posted by: Jonnette Watson Hamilton | Aug 14, 2009 1:04:38 PM

I think This powerful common law protection for non-breaching purchasers evolved for a variety of social and economic reasons. T

Posted by: john beck property vault | Sep 10, 2009 12:10:48 AM

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