Equity Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Equity, written in plain English, along with examples of how it is used.

What is Equity?

n. 1) a venerable group of rights and procedures to provide fairness, unhampered by the narrow strictures of the old common law or other technical requirements of the law. In essence courts do the fair thing by court orders such as correction of property lines, taking possession of assets, imposing a lien, dividing assets, or injunctive relief (ordering a person to do something) to prevent irreparable damage. The rules of equity arose in England where the strict limitations of common law would not solve all problems, so the King set up courts of chancery (equity) to provide remedies through the royal power. Most eastern states had courts of equity or chancery separate from courts of law, and others had parallel systems of law and equity with different procedural rules. Now most states combine law and equity and treat both under “one cause of action.” 2) the net value of real property, determined by subtracting the amount of unpaid debts secured by (against) the property from the appraised value of the property.

History and Meaning of Equity

Equity is an important concept in law that concerns the idea of fairness and justice. It refers to a body of principles and procedures that were developed in England to supplement and sometimes override the strict rules and limitations of common law. The concept has evolved to become an essential aspect of modern legal systems, particularly those in the US, that strive to achieve fairness and justice in a wide range of legal matters.

The roots of the legal concept of equity can be traced back to England in the 14th century. Many people at the time felt that the common law system of courts was too rigid and unfair, particularly in cases where strict adherence to the law would lead to an inequitable result. As a result, the King of England established a separate court system, known as the Court of Chancery, which was designed to supplement the common law courts and provide remedies based on principles of fairness and equity.

Examples of Equity

  1. In a divorce case, a court may use the principles of equity to divide property and assets in a fair way based on factors like each spouse's financial contributions, earning capacity, and other relevant factors.
  2. If someone breaches a contract and causes injury to another party, the injured party can bring a lawsuit seeking equitable relief, such as an injunction to stop the other party from continuing the harmful behavior rather than simply seeking money damages.
  3. A court may use the principles of equity to prevent someone from profiting from their own wrongdoing, such as might be the case in a breach of trust lawsuit.

Legal Terms Similar to Equity

  1. Common law - The legal system in England and many other countries that is based on the principles and precedents established by judges over time.
  2. Remedy - The legal relief or solution that a party seeks in a lawsuit or legal case.
  3. Damages - Money awarded by a court as compensation for harm or injury caused by someone's actions.
  4. Injunction - A court order that requires someone to do or not do something, often used as a remedy in civil lawsuits.
  5. Trust law - A body of law that governs trusts, which are legal arrangements where one person holds property or assets for the benefit of others.