top of page

“Law” v. “Equity”

Updated: Feb 16

When a dispute arises, I frequently ask my clients, “so what do you want?” It’s a simple question, but the answers vary from client to client: money, the other side’s performance, “I want out,” etc.


Those goals have names (damages, specific performance, rescission). And they are often collectively called “remedies.” Common law jurisdictions (like California, Texas, Delaware, England and Wales, most Canadian provinces, etc.) divide these into two broad categories: legal remedies and equitable remedies.


What’s the difference?


Legal remedies are those that derive from the remedies allowed in courts of law, and it generally refers to compensatory damages in the form of money. In most cases, this will be the amount of money it takes to compensate a wronged party for another’s bad acts. Did you sell property and the other side only paid half? You sue for the other half. Did you get hit by a car? Your damages are your medical bills.


Equitable remedies are often non-monetary, but the goal is to satisfy notions of justice. You wanted property and paid for it? Maybe you want your money back, but more likely you want that property. Obtaining the money is a legal remedy; obtaining the property is an equitable remedy.

Why does it matter?


It matters because you want the remedy to reflect what you want, and because you might sometimes only be entitled to one or the other.


In the example above, you want the property. You want to pay the agreed price and obtain ownership. In that case, you would sue for specific performance. You might also sue for breach of contract (meaning you’re seeking compensatory damages) just in case the court decides that specific performance isn’t appropriate.


Perhaps you’re only entitled to an equitable remedy. For example, you agree to sell goods for $10,000. But your state requires a contract of $5,000 or more to be written. You will not be able to win on a breach of contract claim. But you can sue for equitable relief: the reasonable value of the goods provided.


What other considerations are there?


First, who will be the fact-finder? In bench trials (that is, the judge decides issues of fact and there is no jury), it doesn’t matter. But if you have a jury trial, in general, the jury determines legal issues while the judge determines equitable issues.


This can also affect your choice of affirmative defenses. For example, statutes of limitations put a cap on the length of time you have to sue. Perhaps you’re sued for breach of contract, but it has been years since it happened, and the plaintiff waited for years to sue despite knowing of the breach. If the statute of limitations hasn’t expired, you can still claim that the plaintiff waited too long. This is called the doctrine of laches, and is much more flexible.

Finally, it can affect where you file your lawsuit. Most American jurisdictions have merged courts of law and courts of equity, but some jurisdictions maintain a distinction. The most notable is the Delaware Court of Chancery, but other jurisdictions have them as well (for example, Mississippi, Tennessee). If you are seeking certain equitable remedies, you may have to file in the courts of equity.


Where did this distinction come from?


Like so many other things in our legal system, it came from medieval England. The courts were meant to dispense law. But this often led to unjust results, as the law is meant to be drafted in general terms, but cannot always allow for every possible eventuality. In order to make sure that justice was done, a King's Court was established to ensure justice be done, as opposed to relying on the more rigid rules of the courts of law.


Discussions of equity as opposed to law go back further, to Thomas Aquinas, to the New Testament, and to Aristotle. Indeed, Cicero, writing in the 1st century BC, wrote that "the greatest law can be the greatest injustice" (my humble translation of "summum jus, summa injuria").


Conclusion


Law is meant to compensate; equity is meant to ensure just results. In many cases, you might end up with two sets of "goals." Make sure you know, and make sure your attorney knows, what you want before diving into litigation.

2 views0 comments

Recent Posts

See All

Texas Business Courts – What, Why, and How?

In 2023, Texas adopted HB 19, establishing the Texas Business Courts ("TBC"). The TBC will operate in several metropolitan areas, the TBC will have specific jurisdictional and procedural rules, and th

Severability (Common Clauses)

(This post is part of a series called “Common Clauses,” focused on explaining so-called boilerplate provisions of contracts. Click the link to see other posts in this series). What is it? A severabili

Commenti


bottom of page