Cooperative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] 1 AC 1

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Facts
  • There was a Safeway open in a super market
  • It was under a 14 year lease where one of the terms of the contract was to keep it open for certain hours
  • Safeway decided to close that supermarket because it was underperforming (operating at a loss)
  • The owner of the premises sued to force them to stay
Held
  • Hoffman, Hope & Clyde LJ: Generally, Courts will not force businesses to keep trading
  • Specific performance is an exceptional, discretionary remedy
  • The most frequent reason for not forcing businesses to keep trading is that it would require too much supervision
  • The supervision rule means that they do not want to have to keep making decisions about the contract
  • To force them to perform is to hover the sword of Damocles over their heads. This is no way to run a business.
  • Also contempt of court may be too heavy a punishment
  • There is a distinction between orders to achieve a result (e.g. fix the house) and continue something (e.g. run a shop)
  • Specific performance requires precision in terms of what they want
  • Forcing someone to carry on a business may cause unjust enrichment to the other
  • Specific performance can yoke together two parties who do not get along at all. This is wasteful for the Courts
  • The cumulative effect of these makes it sensible that specific performance shouldn’t be enforced to make businesses continue
  • However in further cases you must consider the ethics

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