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Module 1 Equity - An Introduction

Equity developed as a result of defects in the common law system, which was rigid and inflexible. This led to injustice and inadequate remedies. [1] There were then two legal systems in England - common law courts and courts of chancery. [2] Courts of chancery were more focused on fairness and intention, applying principles like maxims of equity. [3] A trust involves three parties - an author/settler who establishes the trust, a beneficiary, and a trustee to whom legal ownership is transferred. Trustees have obligations to act in the interests of beneficiaries. [4] Over time, equity developed to supplement and modify common law, providing remedies where common law was defective. It focused

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19 views3 pages

Module 1 Equity - An Introduction

Equity developed as a result of defects in the common law system, which was rigid and inflexible. This led to injustice and inadequate remedies. [1] There were then two legal systems in England - common law courts and courts of chancery. [2] Courts of chancery were more focused on fairness and intention, applying principles like maxims of equity. [3] A trust involves three parties - an author/settler who establishes the trust, a beneficiary, and a trustee to whom legal ownership is transferred. Trustees have obligations to act in the interests of beneficiaries. [4] Over time, equity developed to supplement and modify common law, providing remedies where common law was defective. It focused

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MODULE – I – EQUITY – AN INTRODUCTION

1. Origin, Nature, Development and Growth of Equity-Equity under the Roman,


English and the Indian legal system
Generally, on Equity:
 Equity developed as a result of the defects in the common law system (rigidity and
inflexibility of common law leading to injustice + nature of remedy was such that it was
inadequate). Then, there existed two systems of law in England – the Common Law
Courts and the Courts of Chancery. These systems were contrasting in a lot of respects.
Then, there arose a point where there were talks of merging the systems due to the
problem of jurisdiction shopping.
 The early Chancellors in Chancery Courts were bishops. They decided the matters based
on fairness and conscience. They applied principles called the Maxims of Equity.
 When there existed a conflict between the judgements of the Court of Common Law and
the Chancery Court, it was referred to the King (the King was then popularly referred to
as the fountain of justice). In such cases, it was decided that equity would prevail over
law.
 While the Courts of Common Law gave importance to the action, Courts of Equity gave
importance to intention (example of Right to Redemption given to a Mortgagor).
 Thomas Moore was the first Chancellor who had a legal background.

 John Seldon criticized the system of equity, stating that there existed no yardstick to
measure the conscience of the Chancellors.
ON TRUSTS
There are three parties in a Trust:
1. Author/Settler
2. Beneficiary
3. Trustee
The Trust deed is entered into by the Author and the Trustee (thus, a minor may be
beneficiary, but not a trustee). Once the wishes of an author have been agreed to, the
trustee cannot renounce the trust later on. The only exceptions to this rule are:
1. Beneficiaries are sui juris.
2. Court has allowed for such deviation.
As a matter of right, the trustee is not entitled to a claim of renumeration. This rule,
however, has exceptions:
1. Express agreement of renumeration.
2. Agreement of renumeration entered into at a later stage considering the nature of
the work.
Furthermore, a Trustee is reimbursed in case the expenses are incurred so as to maintain
the trust. Only the beneficiary can enforce the trust. While the legal ownership of the
trust property is with the Trustee, the beneficial ownership of the trust property is
with the Beneficiary.

Concept of Equity – An Introduction


 The system of equity includes that portion of natural justice which is judicially
enforceable but which for various reasons was not enforceable by the Courts of Common
Law.
 Equity is that system of justice which has developed in and administered by the Court of
Chancery in England in the exercise of extraordinary jurisdiction.
 Equity, unlike the common law, was never intended to be an independent system of law.
It presupposed the existence of the common law, which it supplemented and modified.
 Exclusive jurisdiction of Chancery Courts – Trust, for example

 Concurrent jurisdiction – Breach of contract (Different remedies)

 Auxiliary jurisdiction – Chancery Courts developed new procedure in law

 Extraordinary jurisdiction – King had transferred cases to his Chancellors

 The purpose was never to be a separate/superior system. It did not want to create
vagueness or ambiguity. It had to be developed because of circumstances. Equity had to
intervene when the law was defective or the remedy was insufficient.
Meaning of Equity
 The word “Equity” is derived from the word aequitas, which means Equalized. It
literally means “fairness”. It is the equalization of or levelling of any arbitrary
interference or denial of justice.
 Equity regulates the conduct of a person. The past and future conduct becomes relevant.
 The principles of equity are much are much broader than the principles of natural justice
as they aim to eliminate arbitrariness.
Definitions
 Maitland – The body of rules administered by English Courts f justice which were, if not
for the operation of the Judicature Acts, would be administered by only those Courts
which would be known as the Courts of Equity.
 Henry Levy Ulman – Body of rules whose source is neither custom nor written law but
imperative details of conscience which had been set forth and developed in Chancery
Courts.
 Snell –

2. Divisions of Equity Jurisdiction-The Exclusive, Concurrent and Auxiliary


3. Equity and the Common Law – Relationship between Equity and the Common Law-
Divergent views, Distinctive features of Equity and the Common Law
4. Fusion of Equity and the Common Law-The Judicature Acts-1873-1875
5. Equity as a source of Law
6. Role of Equity in modern law

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