Equity and Trusts

Equity and Trusts

Introduction

Equity in law is a field of jurisdiction that enables the judiciary to apply principles or morals in cases where strict adherence to the law would result in unjust sentencing. In some systems, equity is considered before the jury makes its decision. Equity is a body of law, and the word 'equity' evokes ideas of fairness and justice. Certainly equity's approach is different. Initially, equity was only called upon to intervene when the common law rules were seen as inadequate. If equity reacted at all, it necessarily reacted differently from the common law. Its procedures, substantive rules, remedies, and enforcement techniques all differed from the common law's. At the substantive level, equity might declare a contract not binding even though it was binding at common law, or declare that a party owed obligations of confidentiality not recognized by the common law. When it came to remedies, equity largely ignored the common law practice of money remedies, and typically ordered the defendant to do something, to hand over an item of property, perform a contract, cease creating a nuisance, or sign a document. And if enforcement of these orders was needed, equity did not follow the common law practice of stripping wrongdoers of assets to the extent necessary to pay the damages owed, but instead regarded it as contempt of court to refuse to comply with equity's order. Historically, defendants could be thrown into prison for such contempt; this was powerful persuasion to comply. Indeed, in one of equity's most valuable developments, equity slowly took this idea of specific performance and specific enforcement to its logical extreme: if equity thought the claimant was entitled to certain property, then it would order the defendant to deliver the property to the claimant on pain of imprisonment for failure to do so. Because these orders had to be carried out, and the claimant had to receive the property, the orders were eventually seen as giving the claimant ownership of the property 'in equity' even before physical delivery by the defendant, and, eventually, even before the court had made its order. This technique effectively converted personal remedial obligations into property, and so the trust was born.

There is perhaps no area of law in which the High Court has made as great a contribution to the jurisprudence of the common law world as in its judgments on equity. 'Equity' is not a discrete area of law in the same way as might be said of contract law, corporations law, tort law, or land law. Rather, this branch of the law includes a variety of doctrines and remedies, all of which originated in the jurisdiction of the Court of Chancery, and many of which have wide-ranging applications. Equitable principles may be involved in decisions to set aside transactions or gifts procured in an unfair manner, to hold people to their word when the general rules of the law would allow them to avoid it, to moderate the consequences of applying certain rules where ...