What is Equity?

What is Equity?

When looking for a general definition of equity, the Oxford English Dictionary describes it as ‘the quality of being fair and impartial’. Although this captures the ordinary meaning of the word, it is arguably too vague for legal purposes.

The legal definition describes equity as 'a branch of law that developed alongside common law and is concerned with fairness and justice, formerly administered in special courts'. This provides a clearer legal context, but it still defines equity primarily by reference to fairness and justice. It therefore does not fully explain what equity is in its own right.

A further definition, found in a political dictionary, describes equity as a ‘sub-system of English and related legal systems’ derived partly from principles of natural justice and partly from the historical development of the Court of Chancery. This definition provides greater historical context, but introduces another problem: what exactly are the ‘principles’ on which equity is based?

Why is Equity Difficult to Define?

These definitions demonstrate why equity is difficult to define. They repeatedly associate equity with concepts such as justice, fairness and natural justice, without necessarily explaining what these concepts mean in practice. For a student encountering equity for the first time, this can make the subject appear more complicated than it needs to be.

In the Fordham Law Review in 1951, Howard L. Oleck observed that equity has ‘too many shades of meaning’ to be given one definitive description. [1]. Rather than attempting to provide an entirely precise definition, Oleck suggested that a definition of equity should be ‘suggestive rather than precise’ and should ‘invite inquiry rather than answer it’. Attempting to reduce it to one fixed definition may therefore overlook the historical and practical nature of the subject.

Equity, Justice and Fairness

Equity is often associated with justice and fairness because one of its principal functions has historically been to prevent the rigid application of common law from producing an unjust result. However, it would be misleading to treat equity as simply another word for fairness.

The relationship between equity and justice can instead be understood through the situations in which equitable principles operate. Where the strict application of legal rules would produce an outcome regarded as unconscionable, equity may intervene through its doctrines and remedies.

When assessing what is equity, all readings and materials around the subject demonstrate that equity has a direct link to conscience, justice, and fairness.

Equity and Conscience

The connection between equity and conscience can be traced back to the historical development of the Court of Chancery in medieval England. As early equity developed, the Chancellor's jurisdiction was closely associated with the idea of acting according to conscience.

Various arguments have been fought on how it can be defined when arguably everyone has a different conscience. This issue can be first seen when looking at the historical use of conscience in the equity courts. The early chancellors only had to use their conscience to make decisions, meaning all judges were not subject to any law and could use their conscience. Yet, arguably, as all the men held the same views and were of the same religion, there was a sense of consistency among the decisions. Although, when men with a more legal background were to take over it was argued that 'one judges perception of right or wrong deferred from another' and this was where further issues started to occur with the distribution of equity.

The historical changes in chancellors, principles, and understanding have somewhat changed the understanding of conscience. Nevertheless, there is argument which shows how 'there would be hardly any consistency of value judgements between various religions', an argument which goes against the judges using their own views as conscience because of the current complex and modern society we find ourselves in.

Does Equity Have a Moral Basis?

It has also been argued that because equity and conscience are there to stop unconscionable results, equity could also have a moral basis.

The concept of equity and its moral basis can be supported by Lord Ellesmere's speech in the Earl of Oxford Case [1615] 1 Ch Rep 1, 'correct men's conscience for fraud, breaths of trusts, wrongs and oppressions ... And to soften and mollify extremity of the law'. The moral basis here is that equity’s aim is to stop people doing wrong and taking an unfair advantage of situations; this moral basis is now shown through equitable maxims such as 'equity acts in personam'.

Moreover from Lord Ellesmere’s quote it can be argued that equity is more concerned with society’s actions. This means that equity is more concerned with what societies do as being morally incorrect, rather than the thought process, their conscience, which follows. Equity focuses on what is morally right from wrong within the eyes of the law, whereas the law states what is legally right from wrong.

Conscience is therefore an important foundation of equity, but it is not necessarily the definition of equity itself.

Justice and fairness can be viewed as objectives, conscience as an underlying principle for identifying unconscionable conduct, and equity as the body of legal remedies through which these ideas are given practical effect.

[1] Howard L. Oleck, “Historical Nature of Equity Jurisprudence”, 20 Fordham L. Rev. 23 [1951], Pg 1