equity

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For more information on equity, visit Britannica.com.

noun

The state, action, or principle of treating all persons equally in accordance with the law: due process, justice. See right/wrong.

Definition: impartiality
Antonyms: bias, inequity, partiality, unfairness, unjustness

(1) Even-handed treatment. Equity requires that relevantly similar cases be treated in similar ways. For example, two persons doing the same job in the same way with similar results for the same employer would expect the same pay. Again, it would be inequitable if two individuals committed the same crime in similar circumstances, but received quite different sentences. Equity is therefore closely connected to equality, and to the rule of law. Controversy arises from the delineation of relevant similarity: the notions of equity and precedent both raise this problem.
(2) An older meaning of equity referred to the need to modify the consequences of a strict application of the law to avoid unfair or unconscionable outcomes. From the sixteenth to the nineteenth century, some English courts were specifically designated as ‘equity’ courts in contrast to those dealing with statute and common law; since 1873 all English courts are supposed to follow the legal rules of equity.

— Andrew Reeve

The value of an owner’s interest in property, computed by subtracting the amount of outstanding mortgages or liens from the total value of the property.

The pursuit of fairness. The money value of property in excess of claims, liens, or mortgages on the property. In the U.S. legal system, a body of law that seeks to achieve fairness on an individual basis.

Equity is contrary to the notion that law is simply the strict, formal interpretation of statutes and precedent (similar previous case decisions). According to the formalist approach, the individual fairness of results is less important than the adherence to predictability.

Historically, the English and U.S. legal systems have honored formalism before equity. Indeed, the subordination of equity is systemic. Equity issues and cases are considered exceptions to the rule of formalism. Equity decisions cannot be decided by a jury and are left to the sound discretion of a judge. Equity decisions do not even merit the description legal; instead, they are called equitable.

Equity in U.S. law can be traced to England, where it began as a response to the rigid procedures of England's law courts. Through the thirteenth and fourteenth centuries, the judges in England's courts developed the common law, a system of accepting and deciding cases based on principles of law shaped and developed in preceding cases. Pleading became quite intricate, and only certain causes of action qualified for legal redress. Aggrieved citizens found valid complaints dismissed on technicalities. If a complaint was not dismissed, relief was often denied based on little more than the lack of a controlling statute or precedent.

Frustrated plaintiffs turned to the king, who referred these extraordinary requests for relief to a royal court called the Chancery. The Chancery was headed by a chancellor who possessed the power to settle disputes and order relief according to his conscience. The decisions of a chancellor were made without regard for the common law, and they became the basis for the law of equity.

Equity and the common law represented opposing values in the English legal system. The common law was the creation of a judiciary independent from the Crown. Common-law courts believed in the strict interpretation of statutes and precedential cases. Whereas the common law provided results based on years of judicial wisdom, equity produced results based on the whim of the king's chancellor. Common-law judges considered equity arbitrary and a royal encroachment on the power of an independent judiciary. Renowned seventeenth-century judge John Selden called equity "a roguish thing" and noted that results in equity cases might well depend on the size of a chancellor's foot.

Despite this kind of opposition, equity assumed a permanent place in the English legal system. The powers of the Chancery became more defined; equity cases came to be understood as only claims for which monetary relief was inadequate. By the end of the seventeenth century, the chancellor's opinions became consistent enough to be written up in a law reporter.

Because of its association with the king, equity was viewed with suspicion in the American colonies. Nonetheless, colonial legislatures understood the wisdom of allowing judges to fashion remedies in cases that were not covered by settled common law or statutes. The Framers of the U.S. Constitution recognized the providence of equity by writing in Article III, Section 2, Clause 1, that the "judicial Power shall extend to all Cases, in Law and Equity." All states eventually allowed for the judicial exercise of equity, and many states created special courts of equity, which maintained procedures distinct from those of courts of law.

In 1938, the Federal Rules of Civil Procedure established one system for processing both law and equity cases. Soon after, most states abolished the procedural distinctions between law and equity cases. In federal courts and most state courts, all civil cases now proceed in the same fashion, regardless of whether they involve legal or equitable redress.

The most important remaining distinction between law and equity is the right to a jury trial in a civil case. Where the plaintiff seeks a remedy of money damages, the plaintiff is entitled to a jury trial, provided the amount sought exceeds an amount specified by statute. Where the plaintiff seeks a remedy that is something other than money, the plaintiff is not entitled to a jury trial. Instead, the case is decided by one judge. If a plaintiff asks for both equitable and monetary relief, a jury will be allowed to decide the claims that ask for monetary relief, and a judge will decide the equity claims. Judges are guided by precedent in equity cases, but in the spirit of equity, they have discretion and can rule contrary to apparent precedent.

Delaware and Mississippi are among the few jurisdictions that still separate law and equity cases. In Delaware, equity cases are heard in a separate court of equity, which is presided over by the chancellor of Delaware. In the words of Chancellor William T. Quillen, this preserves "a touch of royalty" for Delaware's judiciary.

In any court, equity or otherwise, a case or issue may be referred to as equitable. This generally means that the relief requested by the plaintiff is not a money award. Whether to grant equitable relief is left to the discretion of the judge. By contrast, other civil actions theoretically entitle a plaintiff to a prescribed remedy (usually money damages) from either a judge or a jury if, based on the evidence, the defendant is unable to defeat the plaintiff's case.

Equitable Relief

Equitable relief comes in many forms. It may be a restraining order or an injunction, which are court orders directing a party to do or not do something. An accounting may be requested by a plaintiff who seeks to know how his or her money is being handled. A trust or constructive trust can be ordered by a judge to place the care and management of property with one person for the benefit of another. A partition is an order dividing property held between two or more persons. Declaratory relief is granted when a judge declares the rights of certain parties. The effect of a declaratory judgment is to set future obligations between the parties.

Under the remedy of specific performance, a judge may order one party to perform a specific act. This type of relief is often used to resolve contractual disputes involving unique property. For example, the purchaser of a house may not wish to obtain money damages if the seller breaks a contract for sale of the house. This may be so because a house is considered unique and thus the damage is irreparable — that is, it cannot be fully redressed by mere money damages. If the court agrees that money damages would be inadequate redress for the buyer, the judge may order a completion of the sale to the buyer, instead of money damages, for the seller's breach of contract.

Equitable contract remedies offer a judge an array of choices. Rescission discharges all parties to a contract from the obligations of the contract. The remedy of rescission restores the parties to the positions they held before the formation of the contract. Restitution is an order directing one party to give back something she or he should not be allowed to keep. These two remedies may be sought together. For example, if a buyer purchases an antique piano on credit and later discovers it is a fake, the buyer may sue for rescission and restitution. Under such a dual remedy, the buyer would return the piano to the seller, and the seller would return any payments made by the buyer.

Reformation is an equitable way to remedy a contractual mistake. Suppose, for example, that a buyer agrees to order 5,000 units of a product but mistakenly signs a contract ordering the shipment of 50,000 units. If the seller refuses to provide fewer than 50,000 units and demands payment for 50,000, the buyer may sue the seller for reformation of the contract. In such a case, the court may change the terms of the contract to reflect the amount of product actually agreed upon.

Equitable relief has long been considered an extraordinary remedy, an exception to the general rule of money damages. Modern courts still invoke the rule that equitable relief is available only where money damages are inappropriate; in practice, however, courts rarely insist on monetary relief when equitable relief is requested by a plaintiff.

Equitable Defenses

The doctrine of clean hands holds that the plaintiff in an equity claim should be innocent of any wrongdoing or risk dismissal of the case. Laches proposes that a plaintiff should not "sleep on his or her rights" — that is, if the plaintiff knows of the defendant's harmful actions but delays in bringing suit, and the delay works against the rights of the defendant, the plaintiff risks dismissal of the case. Under modern law, such defenses are available in any civil case. They are nevertheless considered equitable because they invoke notions of fairness; are not provided in statutes; and are decided only by a judge, not by a jury.

Other Equitable Doctrines

Many of the equitable doctrines listed here are codified in statutes. This does not make the issues they concern "legal" as opposed to "equitable." Such issues, whether codified by statute or not, are left to the discretion of a judge, who makes a decision based on principles of fairness.

Equitable Adoption

Equitable adoption is the adoption of a child that has not been formally completed but that the law treats as final for some purposes. Generally, a child cannot be adopted without the fulfillment of certain procedures. However, it is sometimes fair and in the best interests of the child to imply that an adoption has taken place. If an adult has performed parental duties and has intended to adopt the child but has failed to fulfill formal adoption procedures, a court may order that for some purposes, the child should be considered part of the adult's family. The most common purpose of an equitable adoption is to give a child the right to inherit from the estate of an equitably adoptive parent.

Equitable Conversion

Equitable conversion completes a land sale when the death of a seller occurs between the signing of the sale agreement and the date of the actual sale. In such a case, a judge will convert the title to the purchaser. This is in fulfillment of the time-honored maxim that "Equity looks upon that as done which ought to have been done."

Equitable Distribution

Equitable distribution can describe a fair allotment of anything. In the law, equitable distribution is a term of art that describes a method used to divide the property of a husband and wife upon divorce. Under this method, the needs and contributions of each spouse are considered when property is divided between them. This differs from the process used under the community property method, where all marital property is simply divided in half.

Equitable Estoppel

Under the doctrine of equitable estoppel, a person is prevented, or estopped, from claiming a legal right, out of fairness to the opposing party. For example, suppose that a person willfully withholds information in order to avoid defending a lawsuit. If the withheld information causes the lawsuit to be brought later than the statute of limitations requires, the person may be estopped from asserting a statute-of-limitations defense.

Equitable Lien

A lien is an interest in property given to a creditor to secure the satisfaction of a debt. An equitable lien may arise from a written contract if the contract shows an intention to charge a party's property with a debt or obligation. An equitable lien may also be declared by a judge in order to fairly secure the rights of a party to a contract.

Equitable Recoupment

Equitable recoupment prevents a plaintiff from collecting the full amount of a debt if she or he is holding something that belongs to the defendant debtor. It is usually invoked only as a defense to mitigate the amount a defendant owes to a plaintiff. For example, if a taxpayer has failed to claim a tax refund within the time period prescribed by the statute of limitations, the taxpayer may regain, or recoup, the amount of the refund in defending against a future tax claim brought by the government.

Equitable Servitude

An equitable servitude is a restriction on the use of land or a building that can be continually enforced. When a land buyer is aware of an agreement that restricts the use of the land, the buyer may be held to the terms of the restriction, regardless of whether it was written in the deed.

Equity in Property

Equity in property is the value of real estate above all liens or claims against it. It is used to describe partial ownership. For example, suppose the fair market value of a home is $80,000. If the homeowner has a mortgage and owes $50,000 on the mortgage, the equity amount is $30,000. The recognition of equity in property allows a property owner to borrow against a portion of the property value, even though the owner cannot claim complete and final ownership.

Equity of Redemption

Equity of redemption is the right of a homeowner with a mortgage (a mortgagor) to reclaim the property after it has been forfeited. Redemption can be accomplished by paying the entire amount of the debt, interest, and court costs of the foreclosing lender. With equity of redemption, a mortgagor has a specified period of time after default and before foreclosure, in which to reclaim the property.

Equity Financing

When a corporation raises capital by selling stock, the financing is called equity financing because the corporation is offering stockholders a partial interest in its ownership. By contrast, debt financing raises capital by issuing bonds or borrowing money, neither of which conveys an ownership in the corporation. An equity security is an equitable ownership interest in a corporation, such as that accompanying common and preferred shares of stock.

See: Discretion in Decision Making.

A body of rules or customs based on general principles of fair play rather than on common law or statutory law.

1. a justifiable share; one likely to be recognized as a fair share in an equity court.
2. total assets less total liabilities.

• e. capital — the value of the capital involved in the enterprise. Includes assets less liabilities, expressed as a fixed sum.
• percentage e. — absolute equity expressed as a proportion of the total worth of the enterprise.

• Courts, Legal Bodies, and the Law - equity: natural right or justice; flexible body of law and nonjury court system, esp. for gaining relief other than financial
• Banking and Financial Services - equity: money invested in property or business entity with mortgages, debts, and liens deducted
• Accounting - equity: owner’s financial claim to or investment in assets or property of business
• Mortgages and Financing - equity: value of property in excess of claims and loans against it

Look up equity in Wiktionary, the free dictionary.

Contents 1 Finance, accounting and ownership 2 Fairness 3 Companies and organizations 3.1 Companies 3.2 Organizations 4 Other

Equity may refer to:

Finance, accounting and ownership

• Equity (finance), the value of an ownership interest in property, including shareholders' equity in a business
  • Stock, the generic term for common equity securities is called stocks
  • Home equity, the difference between the market value and unpaid mortgage balance on a home
  • Private equity, stock in a privately held company
  • Equity in income of affiliates, an accounting term referring to the consolidated or unconsolidated ownership in affiliate companies

Fairness

• Equity (law), a branch of jurisprudence in common law jurisdictions
• Equity (economics), the study of fairness in economics
• Educational equity, the study and achievement of fairness in education
• Intergenerational equity, equality and fairness in relationships between people in different generations (including those yet to be born).
• Equity theory, on the relations and perceptions of fairness in distributions of resources within social and professional situations.
• Employment equity (Canada), policy requiring or encouraging preferential treatment in employment practices for certain designated groups
• Health equity, fairness and justice in health and healthcare

Companies and organizations

The word equity is also used in the names of the following companies and organisations:

Companies

• Equity Bank Group, a financial services provider in East Africa, headquartered in Nairobi, Kenya
• Equity Bank (Uganda) , a subsidiary of the Equity Bank Group
• Equity Industries, an electronics subsidiary of Chiaphua Components Group
• Equity Music Group, a country music record label
• Equity Office Properties Trust, one of the largest owners and managers of office buildings in the United States

Organizations

• Actors' Equity Association, Labor union of actors and stage managers in the United States.
• Canadian Actors' Equity Association, an association in Canada
• Forum Party of Alberta, a defunct political party from Alberta, Canada also known as the Equity Party.
• Equity (trade union) (formerly British Actors' Equity Association), an association in the United Kingdom
• Transportation Equity Network, a grassroots organization advocating equity-based transportation policies in the United States

Other

• In poker strategy, a player's expected share of the pot
• Brand equity, in marketing, the value built up in a brand

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Dansk (Danish)
n. - retfærdighed, aktiekapital, stamaktier, friværdi, billighedsret, skuespillerforbundet

Nederlands (Dutch)
rechtvaardigheid, aanvullend rechtssysteem, bepaalde, aanvullende vorm van Engels recht, claim volgens deze rechtsvorm, Equity (Engelse acteursvakbond), kapitaal in aandelen, actief vermogen

Français (French)
n. - équité, (Écon) fonds ou capitaux propres, capital actions, (Jur) équité, (GB) syndicat des acteurs

Deutsch (German)
n. - Billigkeit, Stammaktien

Ελληνική (Greek)
n. - ευθύτητα, τιμιότητα, επιείκεια, αμεροληψία, ισονομία, ευθυδικία, (οικον.) μετοχή, (Βρετ.) σωματείο ηθοποιών, (νομ.) η περί δικαίου αντίληψη, νομολογία περί αστικής ευθύνης, (οικον.) καθαρή θέση, διαφορά ενεργητικού-παθητικού

Italiano (Italian)
equità, azione bi borsa

Português (Portuguese)
n. - eqüidade (f) (Jur.), imparcialidade (f), participação (f) acionária (Fin.)

Русский (Russian)
справедливость, обыкновенная акция

Español (Spanish)
n. - equidad

Svenska (Swedish)
n. - rimlighet, rättvisa, sedvanerätt

中文（简体）(Chinese (Simplified))
公平, 公正

中文（繁體）(Chinese (Traditional))
n. - 公平, 公正

한국어 (Korean)
n. - 공평, 형평법

日本語 (Japanese)
n. - 公平, 衡平法, 普通株

العربيه (Arabic)
‏(الاسم) إنصاف, عداله‏

עברית (Hebrew)
n. - ‮צדק, הגינות, יושר, ערך מניות שהנפיקה חברה, הערך הנקי של נכס כפוף למשכנתה‬

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