Kara Sears
The English common law system, established by King Henry II in 1154, created a unified system of law across the country. However, the concept of equity, rooted in the Court of Chancery, emerged as a distinct body of law to address the limitations of common law. For centuries, England maintained separate court systems for law and equity, with the former adhering to strict legal rules and the latter granting discretionary powers to chancellors to achieve fairness. The Judicature Acts of the 1870s procedurally fused the administration of common law and equity, but debates persist regarding the extent of their fusion, with some jurisdictions, like the United States and certain states, retaining elements of separate systems.
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What You'll Learn
History of common law and equity
Common law, also known as judicial precedent, judge-made law, or case law, is a body of law primarily developed through judicial decisions rather than statutes. It is deeply rooted in stare decisis, which means that courts follow precedents established by previous decisions. In the 12th century, England saw a shift from local, informal power arrangements to a formal government. During the reign of Henry II (1154-1189), permanent royal courts were established in Westminster, London. Henry II is credited with institutionalizing common law by creating a unified system of law common to the country.
The Court of Chancery, which administered equity, began operating as a court in the 14th century. Chancellors were often well-versed in Roman law and canon law. The English concept of equity was influenced by the Roman concept of 'aequitas'. By the 15th century, the judicial power of the Chancery was clearly recognized, and English lawyers thought of it as a court. The Chancellor's jurisdiction was not bound by precedent or strict legal rules, allowing for the use of discretion in administering justice. This flexibility and adaptability in achieving justice and fairness made the Court of Chancery increasingly popular, soon leading to conflict with the common law courts.
In the 17th century, it was established that equity should prevail in cases of conflict between common law and equity. The Judicature Acts of the 1870s fused the courts of equity and common law into a unified court system, ending their institutional separation. However, the actual bodies of law were not fused. The debates over treating equity as a separate body of law in the 20th century were labelled the "fusion wars". There is still a difference of opinion in Commonwealth countries as to whether equity and common law have been fused or are merely administered by the same court.
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Differences between common law and equity
The differences between common law and equity are reflected in their histories, their functions, and the ways in which they are administered.
History
Historically, common law and equity were administered in different courts. Common law was established in the central royal courts, including the Court of King's Bench, the Court of Common Pleas, and the Exchequer. These courts were presided over by judges, who served as the source and upholders of the law.
Equity, on the other hand, was developed in the Court of Chancery, or Chancery, presided over by the chancellor to the monarch. Chancellors often had theological and clerical training and were well-versed in Roman law and canon law. The court provided remedies for cases where the strict procedures of common law caused injustice or provided no remedy to a deserving plaintiff. This distinction between the two systems dates back to the 14th century and continued until the 1870s, when the Judicature Acts fused the administration of the two systems of law.
Function
Common law establishes general rules that provide certainty, while equitable rights act as a check and balance on common law. Equity supplements common law by developing new remedies and recognising new rights where common law fails to act. For example, in the case of a stolen computer, a common law court may order the thief to repay the value of the computer to the owner, but a court of equity could order the computer to be returned to the owner, providing a more equitable solution.
Administration
The Judicature Acts of the 1870s fused the administration of common law and equity, ending their institutional separation. However, the actual bodies of law were not fused, and jurisdictions that inherited the common law system differ in their treatment of equity. In England and Wales, Australia, New Zealand, and Canada, equity remains a distinct body of law.
In modern legal practice, the two systems are separated by the way in which cases are heard and the types of decisions that can be made. Most common law cases are heard by a jury, with a judge as arbiter, and decisions can result in punishment or financial restitution. Equity cases, on the other hand, are typically heard only by a judge, who decides on the form of the judgment, which may include action or cessation of action by one party.
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The Judicature Acts
Prior to the Acts, England had two distinct court systems. The courts of "law" or "common law" could only award monetary damages and recognised only the legal owner of property. On the other hand, the courts of "equity" or "chancery" could issue injunctive relief and recognise trusts of property. This duality of systems often led to conflicts and prolonged litigation, as one court could countermand the other.
The Acts also brought changes to the mode of pleading. Previously, common law pleadings were criticised for not stating the facts, while chancery pleadings were considered overly lengthy and complex. The Judicature Acts shifted the emphasis from the "form" of action to the "cause" of action, allowing litigants to state facts without being bound by specific forms. This made pleadings more relaxed and flexible, adapting to the specific circumstances of each case.
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Courts of Chancery
The Court of Chancery, also known as the Court of Equity, was a court in England and Wales that followed a set of flexible rules to avoid the slow pace of change and possible harshness of the common law. Chancery originated in Medieval England as a distinct court of equity, named for the Lord Chancellor.
The Court of Chancery had jurisdiction over all matters of equity, including trusts, land law, the estates of lunatics, and the guardianship of infants. It was an extension of the Lord Chancellor's role and was primarily concerned with conscientious law. The Court of Chancery had a far greater remit than the common-law courts, whose decisions it could overrule, and was far more flexible. For instance, while common law courts were mostly limited to providing monetary damages, the Court of Chancery could order forms of equitable relief such as specific performance or injunctions.
The Court of Chancery formally split from and became independent of the curia regis in the mid-14th century, at which time it consisted of the Lord Chancellor and his personal staff. Initially an administrative body with some judicial duties, the Chancery experienced explosive growth in its work during the 15th century, particularly under the House of York. This growth is attributed to its becoming an almost entirely judicial body.
The Judicature Acts of the 1870s ended the institutional separation between common law and equity, and the Supreme Court of Judicature Act 1873 and 1875 finally succeeded in fusing the two systems by dissolving the Chancery and creating a new unified High Court of Justice. However, some Commonwealth countries, such as Australia, continue to reject the "fusion fallacy", maintaining that equity and common law have not been fused but are merely administered by the same court.
Today, only a few states in the US maintain separate chancery courts. Delaware's Court of Chancery is widely recognised as the nation's preeminent forum for resolving disputes involving the internal affairs of the thousands of Delaware corporations and other business entities. The Mississippi Chancery Court has jurisdiction over adoptions, custody disputes, divorces, guardianships, and sanity hearings.
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Equity in the US
In the United States, the federal courts procedurally separated law and equity: the same judges could hear either type of case, but a given case could pursue causes in either law or equity, and the two types of cases proceeded under different procedural rules.
In 1937, the new Federal Rules of Civil Procedure combined law and equity into one form of action, the "civil action". However, the distinction survives to the extent that issues that were "common law (as opposed to equity)" as of 1791 (the date of adoption of the Seventh Amendment) are still subject to the right of either party to request a jury, and "equity" issues are decided by a judge.
The states of Delaware, Illinois, Mississippi, South Carolina, and Tennessee continue to have divided courts of law and courts of chancery, for example, the Delaware Court of Chancery. In New Jersey, the appellate courts are unified, but the trial courts are organized into a Chancery Division and a Law Division.
In jurisdictions following the English common law system, equity is the body of law that was developed in the English Court of Chancery and is now administered concurrently with the common law. In common law jurisdictions, the word "equity" refers to "a particular body of rules that originated in a special system of courts".
The Judicature Acts of the 1870s ended the institutional separation of the two bodies of law, but the reforms did not fuse the actual bodies of law.
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Frequently asked questions
Common law is primarily developed through judicial decisions rather than statutes, with judges determining which precedents to apply in new cases. Equity, on the other hand, is a body of law that was developed in the English Court of Chancery, which is now administered concurrently with common law. Equity allows judges to base decisions on general principles of fairness and provides them with greater flexibility to resolve disputes.
Historically, England had two separate court systems: courts of "law" and courts of "equity" or "chancery". The Judicature Acts of the 1870s in England and similar legislation in other countries merged these courts, but debates continue about whether common law and equity have truly fused or are merely administered by the same court.
Separate courts led to administrative inefficiency, with litigation continuing for years as one court could countermand the other. It also caused issues when a case required both money damages and injunctive relief.
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