In some contracts cases, the remedy may be a damages award to compensate the non-breaching party for financial losses. However, in some cases, courts might apply an "equitable remedy" rather than the typical legal remedy of damages. These are remedies that involve action (or non-action) on the part of the breaching party in order to make the other party "whole" after a breach.
- Can Both Legal Remedies and Equitable Remedies Be Recovered?
- What Are the Main Equitable Remedy Classifications?
- What Equitable Remedies Are Available in a Breach of Contract Dispute?
- What Is the Difference Between Legal Remedies and Equitable Remedies?
- What Is a Constructive Trust?
- Do I Need a Lawyer for Help with Equitable Remedies?
In most cases, the plaintiff may elect either legal damages or an equitable remedy. However, the election of remedies and the availability of each will depend on the facts of each case, as well as state and federal laws. If both legal and equitable remedies is available for the plaintiff, the the court may allow the plaintiff to both type of remedies depending on the type of loss the plaintiff suffered and the amount of loss the plaintiff will suffer.
There are two main categories of equitable remedies: Injunctions and Specific Performance.
Injunctions are when the court orders the defendant to take certain actions in order to remedy the situation. For instance, these can include orders to:
- Cease a certain activity (such as halting production that causes to much pollution)
- Transfer property to the rightful owner
- Repair property that is dangerous to visitors
- Change policies or warning signs
Specific performance is where the court orders the party to perform their duty as it is listed specifically in a contract. The main point is that the actions are dictated by the terms of the contract. These may include:
- Paying for an item that has been received
- Shipping goods that were owed to the plaintiff
- Completing an artistic performance or work
- Continuing and completing construction work that has stopped
Thus, equitable remedies tend to be very flexible and will depend on the exact needs of the parties. This means that during a lawsuit, the non-breaching party needs to think critically regarding the type of remedy that they are requesting. In many cases, the assistance of a lawyer may be needed. There are other equitable remedies, such as contract reformation and other types.
There are three types of equitable remedies that are available in contract disputes:
- Specific performance: This is a court order requiring the breaching party to perform their duty owed in the contract because money damages will not remedy the non-breaching party. This usually is applied when the subject matter of the contract is unique.
- Contract Rescission: When a contract is breached because the parties did not agree to the terms or the essential terms were agreed by mistake, the contract may be cancelled.
- Contract Reformation: The contract is rewritten in a manner that will represent the contracting party’s actual intent. This usually occurs when the terms of the contract that was previously agreed were made by mistake.
- Legal remedies are monetary compensation to place the injured party in the same position they were before they were injured. Legal remedies always deal with money damages and monetary losses suffered because of either an injury or a breach of contract. Legal remedies are enforced by a court judgment granting the plaintiff a certain amount of money.
- Equitable remedies are related to fairness instead of actual money damages. Equitable remedies are enforced by the court to either force a person to do a specific act like go through with the purchase of a house or stop a person from performing an act that is causing or will cause the plaintiff an injury. Equitable remedies are usually enforced by a court order.
Constructive Trust is another type of equitable remedy acting like a trust enforced by the court to benefit a party who has been wrongfully deprived of it’s rights or profits by another person’s wrongdoing. This usually occurs when another has breached a fiduciary duty to gain a unfair advantage over the plaintiff using the plaintiff’s property. The courts will then apply a constructive trust on the defendant’s enriched property to prevent the defendant from being unjustly enriched to the plaintiff’s detriment. The defendant will then hold the property in trust for the plaintiff and would ultimately transfer the property to the rightful owner.
Equitable remedies often require a thorough understanding of the law. You may need to business attorney if you need to seek a remedy through the court system. Your attorney can inform you of what your various options might be, and can help you pursue the right course. Also, your lawyer can represent you during court hearings and meetings.