Equitable Remedies

Key aspects defining equitable remedy meaning:

Equitable remedies have certain distinctive characteristics that set them apart from other legal remedies. Some of these key aspects include:

• Discretion of the court: Equitable remedies are granted at the judge's discretion, taking into account the specific circumstances of the case and the conduct of the parties involved.
• Flexible in nature: Equitable remedies are not rigidly defined but are molded to suit the particular case at hand, providing a tailor-made solution to the aggrieved party.
• Focused on fairness: Equity focuses on achieving fairness between the parties as opposed to strict adherence to the letter of the law.
• Not a right: Equitable remedies are considered a privilege rather than a right, meaning that a party cannot demand an equitable remedy as a matter of course.
• Subsidiary in nature: Typically, equitable remedies are sought when other legal remedies, such as monetary damages, are insufficient to provide adequate redress for the aggrieved party.

Equitable Remedies vs Common Law Remedies

There are fundamental differences between equitable and common law remedies that dictate when and how each type of remedy is applied in contract law.

Differences between common law and equitable remedies:

Equitable and common law remedies differ in several key aspects, as illustrated in the following table:

Equitable Remedies for Breach of Contract

Equitable remedies may be used to address various circumstances arising from a breach of contract. Common equitable remedies in contract law include specific performance and rescission.

Specific performance as an equitable remedy:

Specific performance is applied when:

• Monetary damages are inadequate to compensate the aggrieved party
• The subject matter of the contract is unique or rare, such as real property or one-of-a-kind objects
• The terms of the contract are sufficiently clear and definite

Specific performance is generally not available in cases involving personal services, as forcing a party into performing these services against their will may violate personal freedoms. Additionally, the court may refuse specific performance if it would impose an undue hardship on the party breaching the contract.

Rescission in contract law:

Rescission may be granted in cases where:

• Both parties have committed a mutual mistake that affects the essence of the contract
• There is a mistake by one party that impacts the fairness of the contract, and the non-mistaken party was aware of the error
• There is fraud, misrepresentation, duress, undue influence, or unconscionable dealing involved in the formation of the contract

Once a contract is rescinded, any obligations arising from that contract are extinguished, and the parties must typically restore each other to their original positions before entering the contract.

Exploring Types of Equitable Remedies

Injunctions are a type of equitable remedy designed to prevent a specific form of harm or breach of contract from occurring. They are court orders that either prohibit (prohibitive) or compel (mandatory) a party from performing a certain act. Injunctions are employed when the potential harm from a breach is irreversible, or there is no adequate legal remedy available.

Prohibitive vs Mandatory Injunctions

Injunctions can be divided into two main categories – prohibitive and mandatory – based on the actions they direct a party to take or avoid.

1. Prohibitive injunction: This form of injunction restrains a party from performing a specific act that would infringe upon the legal rights or interests of the aggrieved party. For example, prohibiting a competitor from using a company's trade secrets.
2. Mandatory injunction: This type of injunction requires a party to take positive action to correct a wrongful situation, restore an infringed right, or undo the consequences of a breach. For instance, compelling a developer to restore a destroyed natural habitat as a result of illegal construction.

Both prohibitive and mandatory injunctions are granted at the court's discretion based on the specific facts of the case, with factors such as the balance of convenience and the likelihood of substantial harm being taken into consideration.

Other Equitable Remedy Examples

Apart from injunctions, there are several other types of equitable remedies available to courts in addressing different types of legal disputes and situations. These remedies may include rectification, constructive trusts, or account of profits, among others.

Rectification as an example of an equitable remedy

Rectification may be applied when:

• A mistake has been made in drafting the document, resulting in it not accurately representing the parties' agreement or intention.
• There is evidence of fraud, misrepresentation, or undue influence affecting the formation of the contract or agreement.
• The parties had a clear and mutual understanding of the intended terms, but the written document does not accurately reflect them.

Rectification aims at making the written document consistent with the parties' true intentions, thereby ensuring the fair and just enforcement of their agreement.

Constructive trusts and equitable remedies

Constructive trusts can arise in various situations, including:

• Where a person holds property or assets derived from a wrongful act, such as fraud or breach of fiduciary duty, to the detriment of another party.
• In cases of mistaken payments or transfers, where the recipient would be unjustly enriched if allowed to keep the property or assets.
• When a person acquires property or assets through the abuse of confidential information or through a breach of trust.

Courts impose constructive trusts to restore fairness by ensuring that the party holding property or assets obtained through wrongful means does not benefit from their actions at the expense of the wronged party.