Equitable Defenses: Everything You Need to Know
Equitable defenses are usually brought to court as an affirmative defense. The court is asked to excuse an act of the party bringing the cause of action.3 min read
Equitable defenses are usually brought to court as an affirmative defense. The court is asked to excuse an act of the party bringing the cause of action due to their actions that are considered inequitable.
Information About Equitable Defenses
At one time, equitable defenses were only applied in a court of equity, but the defense is now used in a court of law. In the U.S., equitable defenses are available when the remedy sought is "at law".
In its broadest sense, equity is fairness. Examples of equitable defenses to address fairness include:
- Forum non conveniens
- Failure of consideration
- Unclean hands
There are situations where mistakes in the terms of the contract can prevent recovery/remedy for a party. Recovery may be limited depending on if the mistake was mutual or only one party was mistaken.
This is when the non-breaching party intentionally delays bringing forth a lawsuit for breach of contract resulting in prejudice to the breaching party.
This type of contract cannot be enforced under legal or equitable principles. This would include contracts for drug distribution, prostitution, gambling, or other illegal acts.
The non-breaching party and the breaching party have both committed the same type of breach. Under the principles of equitable defense, the party claiming relief cannot be in violation of the terms of the contract.
Equitable remedies will not be issued if doing so results in an undue hardship to the breaching party.
A remedy is not possible if the contract is deemed unconscionable, which means the agreement is one-sided and unfair for one of the parties.
If a contract is made and fraud, lying, or deceit were involved, the contract may not be enforceable due to conditions of misrepresentation.
If there is any evidence that undue influence was used in creating a contract, equitable relief may not be possible. One party using their position of authority to take advantage of the other party is considered undue influence.
Duress is similar to undue influence in that someone feels pressured into doing something. Duress takes it a step further and involves threats or physical harm to one's self or to loved ones.
The two most common equitable defenses are unclean hands and laches.
An important point is that a party who is considering seeking equitable remedy must make sure they have a clean record and have not violated the law.
Another point to consider is that the area of equitable defenses is a complex. An example would be that the defenses used in regard to the performance of a contract may be different from the defenses used for contract rescission. For this reason, it is recommended that a lawyer is consulted to determine if an equitable defense is possible.
In the event a breach of contract is brought, it is best to contact a lawyer as soon as possible to advise you of both legal and equitable remedies that may be available.
An attorney experienced in contract law will explain how equitable defenses work and if they will apply to your situation.
About Equitable Remedies
Equitable relief is not available if the party that violated the contract has a valid defense for breaching the contract. This constitutes an equitable defense, which prevents the non-breaching party from receiving equitable relief.
When a breach of contract occurs, and a suit is filed, equitable remedies are issued when legal remedies, such as monetary damages, cannot adequately resolve the breach.
Equitable relief usually comes by way of the parties taking certain actions, which, in turn, serve to remedy the breach of contract. Equitable relief does not provide monetary compensation.
There are several common equitable remedies. These include:
- Specific performance. This requires the party who breached the contract to fulfill the obligations specified in the contract.
- Contract reformation. This remedy rewrites or revises the existing contract to outline, more clearly, the demands of the parties involved.
- Contract rescission. This remedy cancels the existing contract and replaces it with a new one.
Courts have a significant level of discretion and a variety of factors at their disposal when determining whether equitable relief is appropriate.
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