11.4.4 Defence: Relative impossibility

An obligee can defend a claim of specific performance if the obligee cannot reasonably be expected to incur the costs of specific performance. Current law pro-vides the obligee with different open norms with which he or she can defend a claim of specific performance, such as good faith, relative impossibility and the so-called `MultiVastgoed' norm. These can be considered as variations of the good faith principle that rules Dutch contract law. In essence, these norms can be reduced to the same thing, namely an obligor does not need to perform a contractual obligation if the consequences of performance would be disproportionately large in comparison to the advantage for the obligor. The central question is therefore, when is specific performance so disadvantageous to the obligee that he or she can be removed from his or her duty to specifically perform?

It is difficult to answer this question on the basis of these open norms. In order to solve this issue, a balancing instrument has been proposed in par. 6.3, the socalled 130% guideline, in order to clarify the boundary of the right to specific performance. The standard of specific performance flows from the principle of pacta sunt servanda. The standard of specific performance is protected by the rule that the obligee is only released from his or her duty to specifically perform if the costs of specific performance are higher than 130% of the obligor's objectified interest. This percentage cut-off point and the comparative measuring stick of the obligor's objectified interest allow the measuring stick of reasonableness, upon which the open norms are based, to be made concrete. The choice of a cut-off point of 130% is based on German case law in the field of the law of damages. The percentage is an evidential presumption. A number of different points are important in order to determine the obligor's objectified interest, such as the market value of the performance and the presumed scope of the replacement damages. The objectifying role of the 130% guideline is balanced by two exception categories, which provide for the necessary flexibility in the equation. Firstly, the exception of the inefficient specific performance. If the costs of specific performance are lower than 130% of the obligor's objectified interest, the obligee should still be able to succeed in defending a claim against specific performance if performance would be inefficient. Specific performance is inefficient if the chance is predictably high that the obligee will not be able to perform the obligation. Inefficient specific performance is also apparent in cases where the failure to perform only leads to a minimal drop in value, although the costs of repair are high. The second exception to the 130% guideline is the absence of a reasonable alternative for specific performance. Despite the fact that the costs of specific performance are higher than 130% of the obligor's objectified interest, the obligee may still be required to specifically perform if there is no reasonable alternative. The nature of the obligation to be performed can, for example, require that the obligor can only realise his or her contractual aim by means of specific performance. Restrictions in the law of damages can also lead to a situation whereby damages are not an adequate alternative for specific performance. In determining the adequacy of an alternative for specific performance, the extent of the obligor's fault is also relevant to a certain degree.

The 130% guideline coupled with these two exceptions can contribute to a greater predictability of judicial decisions. Furthermore, this balancing instrument provides a conceptual framework for further refinement of the notion of "relative impossibility". A statutory provision in Book 6, Dutch Civil Code that offers a concrete balancing framework for the clarification of the notion of relative impossibility is to be recommended.

The 130% guideline is proposed as a ground to restrict the right to specific performance in general contract law. In sales law and in contracting work, the right to specific performance takes on another role, because other than by simple non-performance, the right to specific performance with respect to faulty performance manifests itself in two forms, namely the right to repair and the right to replacement. A fault in the obligation performed can be resolved either by repairing the object or the work, or by replacing the obligation performed. The boundaries of the right to repair and replacement were the main focus of par. 6.4. When can a seller or constructor defend him or herself against a claim for repair or replacement with the statement that the costs of these actions would be disproportionately high? In answering this question, current law does not provide clear norms. It has been argued that the seller and the constructor should be able to make a claim on the basis of the 130% guideline. With respect to sales law, it has further been argued that an extra defence should be possible, namely the so-called 20% guideline. If the form of specific performance claimed, for example, replacement, would cost 20% more than the alternative form of specific performance, the seller should in principle be able to defend him or herself against the claim. Although the buyer retains the choice as regards the marmer in which the fault in the obligation to be performed is to be repaired, both forms of specific performance lead to the buyer receiving a performance in accordance with the contract and are to a certain extent equivalent. The 20% guideline protects, on the one hand, the buyer's right to choose and, on the other hand, prevents the seller from unnecessarily high costs in repairing the fault. Since with respect to construction-work, it is not the client party, but the constructor who has the choice whether to proceed via repair or replacement, the 20% guideline is not applicable in construction law.

Finally, the answers have been provided in par. 6.4 to a variety of practical problems, which can arise in the exercise of one's right to repair or replacement.