Equity

The value of a debtor's interest in property that remains after liens and other creditors' interests are considered. (Example: If a house valued at $60,000 is subject to a $30,000 mortgage, there is $30,000 of equity.)

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Answers.com

Justice applied in circumstances covered by law yet influenced by principles of ethics and fairness.

A system of jurisprudence supplementing and serving to modify the rigor of common law.

An equitable right or claim.

Equity of redemption.

Encyclopedia Britannica

In Anglo-American law, the custom of courts outside the common law or coded law. Equity provided remedies in situations in which precedent or statutory law might not apply or be equitable.

By the end of the 13th century, the English king’s common-law courts had largely limited the relief available in civil cases to the payment of damages and to the recovery of the possession of property. They had refused to extend and diversify their types of relief to meet the needs of new and more complex situations. Disappointed litigants had turned to the king with petitions for justice because the courts had afforded either no remedy or one that was ineffective. These petitions were referred to the lord chancellor, who was the king’s principal minister. By the early years of the 14th century the petitions were going directly to the chancellor, and by the middle of that century the Court of Chancery was recognized as a new and distinct court.

These developments resulted in the fashioning by the chancellor of new equitable remedies. The following are representative: specific performance of contract, whereby the victim of a breach might compel the exact performance promised if damages would be a poor substitute, as in contracts to sell land and unique chattels; the enforcement of trusts, where one who had been given title to property in order to manage it for another was required to fulfill his fiduciary obligations; injunction to prevent threatened or continuing wrong, such as destruction of the plaintiff’s invaluable shade trees; restitution of benefits wrongfully acquired, by compulsory surrender of the ill-gotten gains, in order to prevent unjust enrichment; the correction and cancellation of written instruments for mistake and misrepresentation; and the equity of redemption, which enabled a defaulting mortgagor to reclaim his land if he tendered principal and interest within a reasonable time after forfeiture and before foreclosure. Such new equitable remedies contrasted with the narrow rigidity of common-law remedies.

The full growth of equitable remedies was retarded, however, by political pressures from judges and Parliament not to trespass upon the province of the separate law courts. As a result, the chancellor was forced to agree not to hear a case unless there was no remedy at law (e.g., trust) or the remedy at law was inadequate or the threatened injury would be irreparable.

Another restrictive influence was the development of precedent in the Chancery. For generations the chancellors had not considered themselves bound by precedents or rules of law; emphasis had been put mainly upon the discretionary treatment of needs of the individual case. From the mid-16th century on, however, the chancellors were usually common lawyers who began shaping equity into an established set of rules. By the middle of the 17th century the equity administered by the Court of Chancery had become a recognized part of the law of the land: equity gave justice according to law rather than executive justice. Finally, by the Judicature Act of 1873, the competitive, separate law and equity courts, with their attendant delays, expense, and injustices, were abolished and their work combined in a single, departmentalized Supreme Court of Judicature.

Courts of equity also developed early in the United States; but in the late 19th and early 20th centuries most U.S. states similarly abolished the distinctions between actions at law and suits in equity and fused their administration in one procedural system, with only one civil action, in the same court.

Modern equity has been much assisted by legislation. The old notion that equity protects only property rights has been virtually abandoned. Now an employee, for example, can be barred from competing with his employer after discharge or resignation. Statutes have facilitated specific performance of cooperative-marketing contracts and agreements to arbitrate future commercial or labour disputes. An injunction may now be obtained—where other factors of appropriateness permit—against threatened injury to interests of personality, such as civil liberties, privacy, reputation, and domestic relations. Enabling legislation has immensely increased the resort to injunction by government agencies to prevent violation of regulatory statutes, notwithstanding criminal penalties.

Law.com Dictionary

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.

Lect Law Library

A system of law designed to furnish remedies for wrongs which were not legally recognized under the common law of England or for which no adequate remedy was provided by the common law. (2) Another word for stock (or similar securities representing an ownership interest). (3) The amount by which a entity's assets exceed its liabilities.

An accounting term used to describe the net investment of owners or stockholders in a business. Under the accounting equation, equity also represents the result of assets less liabilities.

Merriam Webster

1 a : justice according to natural law or right; specifically : freedom from bias or favoritism b : something that is equitable

2 a : a system of law originating in the English chancery and comprising a settled and formal body of legal and procedural rules and doctrines that supplement, aid, or override common and statute law and are designed to protect rights and enforce duties fixed by substantive law b : trial or remedial justice under or by the rules and doctrines of equity c : a body of legal doctrines and rules developed to enlarge, supplement, or override a narrow rigid system of law

3 a : a right, claim, or interest existing or valid in equity b : the money value of a property or of an interest in a property in excess of claims or liens against it c : a risk interest or ownership right in property d : the common stock of a corporation

The Free (Legal) Dictionary

In its broadest sense, equity is fairness. As a legal system, it is a body of law that addresses concerns that fall outside the jurisdiction of Common Law. Equity is also used to describe the money value of property in excess of claims, liens, or mortgages on the property.

Wikipedia

Equity is the name given to the set of legal principles, in jurisdictions following the English common law tradition, which supplement strict rules of law where their application would operate harshly. In civil legal systems, broad "general clause" allow judges to have similar leeway in applying the code.

Equity is commonly said to "mitigate the rigor of common law", allowing courts to use their discretion and apply justice in accordance with natural law. In practice, modern equity is limited by substantive and procedural rules, and English and Australian legal writers tend to focus on technical aspects of equity. There are 12 "vague ethical statements"[2][3] which guide the application of equity, and an additional five can be added.

As noted below, an historic criticism of equity as it developed was that it had no fixed rules of its own, with the Lord Chancellor from time to time judging in the main according to his own conscience. As time went on the rules of equity did lose much of their flexibility, and from the 17th century onwards equity was rapidly consolidated into a system of precedents much like its common-law cousin.