Cecily Zamora
In contract law, an equitable remedy is a judicial remedy that aims to restore the non-breaching party to the position they would have been in had the breach not occurred. It is a flexible response developed by courts of equity to adapt to changing social conditions. Equitable remedies are discretionary and may be granted by the court in addition to or instead of legal remedies, which are available to a successful claimant as of right. They are particularly relevant in cases involving fairness, such as when one party fails to fulfil their contractual obligations, or when a contract does not reflect the intentions of the parties. Common equitable remedies include injunctions, specific performance, rescission, restitution, and contract reformation.
| Characteristics | Values |
|---|---|
| Purpose | To rectify or make right what has been wronged by the breach of contract |
| Common forms | Injunctions, specific performance, vacatur, money damages, rescission, restitution, contract reformation, declaratory relief, injunctive relief |
| Availability | Available in most common law jurisdictions |
| Applicability | Applicable when one party has committed an unlawful act or when the contract was not performed by its terms |
| Prerequisites | The plaintiff must have been wronged and the defendant's conduct must be fraudulent, unconscionable, or without consideration |
| Limitations | Will not lie against a bona fide purchaser for value without notice |
| Distinction from legal remedies | Equitable remedies are discretionary, whereas legal remedies are available to a successful claimant as of right |
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Injunctions
An injunction is a court order that prohibits a party from engaging in certain activities or enforces negative covenants. Injunctions are a type of equitable remedy, which are non-monetary forms of relief that a court may grant to rectify a wrong committed by the breach of contract. In the case of injunctions, the injured party asks the court to restrain or enjoin the party in breach from certain activities.
There are two types of injunctions: preliminary and permanent. A preliminary injunction can be sought even when money damages are sought as a final remedy, provided that money damages alone cannot adequately compensate the plaintiff or damages cannot be measured with reasonable certainty. A permanent injunction, on the other hand, is a form of final equitable relief that restrains or mandates conduct permanently or until a specified date. Courts will not issue a permanent injunction until they have resolved the merits of the underlying breach of contract action.
In some jurisdictions, a plaintiff seeking an injunction may be required to show that no adequate remedy at law exists. However, the presence of a liquidated damages clause does not always preclude a plaintiff from obtaining injunctive relief, especially if the contract expressly permits the parties to obtain equitable relief.
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Specific performance
An equitable remedy in contract law is a lawful action taken by a court to rectify or make right a breach of contract. A breach of contract occurs when one party fails to live up to their obligations under the terms and conditions set out in the agreement.
For example, in a case where an individual, Rina, offers to buy Beth's house, and Beth accepts but later decides to keep the property, Rina can claim specific performance on the contract. The court can order Beth to go through with the sale at the original purchase price.
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Rescission
In the US state of Virginia, the term "cancellation" is used for equitable rescission.
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Restitution
For example, if a contract is breached because one party fails to deliver goods or services or fails to deliver them on time, a court may order specific performance, requiring the breaching party to fulfill the exact terms of the agreement. Alternatively, the court may issue an injunction, prohibiting the breaching party from continuing their breach.
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Contract reformation
An equitable remedy in contract law is a court-ordered remedy that requires a party to do or stop doing something, rather than paying money. It is a remedy given by the court to compensate for an injury. Equitable remedies are available when one party has committed an unlawful act or when the contract was not performed by its terms.
If reformation is unavailable, the court may opt for rescission, or total contract cancellation. This may be the remedy if one party makes a mistake of which the other party is aware. Rescission may be granted when certain requirements have been proven, such as duress, undue influence, fraud, or insufficiency of consideration.
It is important to note that contract reformation will not be granted if it will cause economic damage to any of the parties in the future. Additionally, courts will not permit reformation if it will lead to an agreement that is unfair or one-sided.
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Frequently asked questions
An equitable remedy is a judicial remedy awarded by a court to compensate for an injury. It is a more flexible response to changing social conditions than is possible in precedent-based common law.
Some examples of equitable remedies in contract law include contract reformation, specific performance, rescission, restitution, injunctions, and constructive trusts.
Specific performance is an equitable remedy in which a judge orders a breaching party to perform its requirements under a contract. For example, a party may be required to transfer a piece of land to the claimant.
An equitable remedy may be awarded when a party has committed an unlawful act or when a contract was not performed by its terms. It is awarded when a plaintiff has been wrongfully denied something or deprived of their rights.
