What is the difference between specific performance and monetary damages?

The distinction between specific performance and monetary damages is fundamental in contract law, particularly in real estate transactions. Specific performance is a legal remedy that compels a party to fulfill their obligations as outlined in the contract. For example, in real estate, if a seller refuses to transfer property to a buyer after the buyer has met all contractual obligations, the court may order the seller to complete the sale as originally agreed upon. This remedy is often pursued when the subject matter of the contract is unique, such as real property, making monetary compensation inadequate.

On the other hand, monetary damages serve to compensate the injured party for the financial losses incurred due to a breach of contract. This means that if one party fails to perform their contractual duties, the other party can seek monetary compensation for the costs associated with that breach. The objective of monetary damages is to make the injured party "whole," or in a financial position similar to what they would have been had the contract been fulfilled.

The other options do not accurately capture the nuances between these two remedies, thereby highlighting the importance of understanding their distinct applications in contract law.