Some Varieties of Consent in Equity

This chapter studies the role of equity in preserving the autonomy of vulnerable members of the community. It focuses on the equitable domains of trusts, fiduciary relationships, undue influence, and unconscionability, where an imbalance of power exists in which one party has only limited or bounded ability to make decisions. Equity takes great care to protect the independence aspect of autonomous decision, but is less concerned about the availability of choice between meaningful options. A party will be deemed by equity as consenting if their agreement is anchored in freedom and information. Thus, great care is taken by the Courts of Chancery to ensure that no impediment to the exercise of the claimant's will was present in the circumstance. In addition, relevant information must be provided, and at times nothing less than independent advice from a third party would satisfy this requirement. Equity thus conscripts its particularistic nature to offer strong protection for two elements that are crucial for autonomous decision-making: freedom from coercion and information.

Equity and the Right to Do Wrong

This chapter discusses how the ‘stickler-enjoining’ account of equity has important limits. While many distinctive doctrines of equity can be understood to limit stickler behaviour, equity in fact often turns a blind eye to, and sometimes even enables, stickler behaviour. One can sort cases in which equity restrains sticklers from those in which it is indifferent to stickler behaviour if one attends to the role of the state in private litigation. Sometimes the state’s responsibilities require it to protect plaintiffs against sticklers. Other times, it requires it to protect the stickler, as a means, for example, of keeping as open as possible each person’s sphere of choices. Ultimately, the self-regarding account of equity sheds light on the question of the relationship between equity and justice: from the distinct perspective of the judgment, sometimes equitable justice is better than legal justice and sometimes legal justice is better than equitable justice.

Aristotle at the Foundations of the Law of Equity

This chapter argues that equity in the Aristotelian sense of correcting for errors arising from the generality of law is no less available in common law than in equity. Indeed, Aristotle’s account is reflected, in remarkable details, in the common law interpretive doctrine of equitable construction. Lord Ellesmere’s appeal to Aristotle in The Earl of Oxford’s Case, then, would seem to undermine rather than support the claim to the jurisprudential independence of equity and jurisdictional independence of Chancery. However, there is another current in Aristotle’s account of equity, substantive rather than functional, that fares much better as the basis of an account of equity’s distinctiveness. This is the idea that equity enjoins persons from being sticklers for their rights in a bad way.

Equity and Institutions

This chapter discusses the significant facilitative role that equity occupies. Among equity’s main concerns are institutions, understood as arrangements or frameworks for human action that have some distinctive normative identity and are oriented to some purpose or goal. The key example is the trust. Many core trust doctrines have been developed to ensure the integrity of the institution of trusts themselves, rather than to bring about remedial justice in the setting of adjudication. Moreover, in developing new forms of trust, courts in equity do not remedy but rather facilitate, making possible more options through which donors can express their intentions. In this way, equity serves a compelling view of liberalism, according to which a measure of the justification of state action lies in its contribution to a social, economic, and political order in which people are able to live autonomous lives. One mode of autonomy-enhancing state actions is the multiplication of institutional options from which persons can chose.

From Riggs v Palmer to Shelley v Kraemer

This chapter presents further insight into the way in which equity adjusts legal liability to fit better with considerations of justice and morality. It highlights the function of the equitable jurisdiction as providing discretionary relief to persons who suffer serious injustices by virtue of the operation of legal rules. The discussion is set within the framework of the chapter’s claim that private law affords those who have suffered wrongs such as torts or breaches of contract ‘recourse’. Recourse consists of courts validating claims for damages and other relief to which claimants are entitled as a matter of right. In contrast, claimants seeking to benefit from the exercise of a court’s equitable powers, because they claim on the basis of justice or moral right rather than legal rights strictly speaking, can only expect a discretionary form of relief that is often issued through the issuance of command-like orders. The chapter then argues that equity is at the core of landmark judicial opinions issued in cases that are not traditionally categorized as cases ‘in equity’, including Riggs v Palmer and Shelley v Kraemer.

What Can ‘Equity’s Darling’ Tell Us about Equity?

This chapter looks at the unique character of equity’s contribution to property law, demonstrating how the central concept of conscience shapes both the content and structure of equitable rights to assets. It examines conflicts between an owner of assets, a purported purchaser of those assets under an unauthorized transfer, and the community that has a stake in the outcome of the dispute. At common law, even an innocent and cautious purchaser cannot defeat a legal owner’s title—with a few limited well-defined policy-driven exceptions—whereas equity allows a purchaser with a clean conscience to defeat even the neediest beneficiary. The central explanatory principle which underlies the choices made by equity is the battle against unconscionability that reflects its distinctive nature as a body of law that is highly responsive to interpersonal morality. However, the flexibility that typifies Equitable doctrines allows it to go beyond justice as between the parties and appeal also to aspects of communal justice. The chapter explores how considerations of distributive justice, need, desert, and efficiency play out in such conflicts when the property is held on trust.

Fusion of Law and Confusion of Equity

This chapter argues for viewing equity as a second-order system—law about law, or meta law—whose loss through fusion has created a variety of jurisprudential quandaries. On this view, equity serves as a second-order safety valve particularly suited to problems of great variability and uncertainty—including opportunism, conflicting rights, and multipolar conflicts—and although such problems were not the exclusive preserve or the only focus of equity courts, the former jurisdictional divide did much to highlight the second-order equitable function. The flattening out of this second-order equitable function through fusion of law and equity has intensified numerous jurisprudential controversies—including the debate between formalism and contextualism and the distinction between rules and standards—in contrast to the older, less polarized path of hybrid law-equity. Effacing distinctive second-order equity also leads to extreme views about the supposed death of contract and all-consuming tort. Even the relationship of law and morality tends to be more fraught when equity as meta law is taken off the table.

The Constitution of Equity

This chapter shows that a remedial conception of equity is incomplete, at least in the forms that cast its aim as enjoining opportunists and those who are sticklers for their rights in a bad way. Along with its anti-opportunist domain, equity has a jurisdictional sphere. In its jurisdictional sphere, equity’s concern is determining the rightful scope and exercise of other-regarding powers. An opportunist or a sticker in a bad way is just someone who has abused an other-regarding power. In this respect, equity and its doctrines exhibit a number of striking parallels with the jurisdiction and doctrines of administrative law. From this, the chapter then draws two conclusions. First, both domains express jurisdictional justice. Second, is either closely related to public law, or is really just a branch of public law. This second lesson explains a number of distinctive features of equity, for example its second-order structure, its historical deployment of the concept of conscience, and the characteristic properties of Equitable remedies.

Discretionary Justice

This chapter asks whether equity’s distinctive role is to do equity in the Aristotelian sense of doing justice where law—by virtue of its generality—would do an injustice, and concludes it is not. Some paradigmatic cases of equity’s interventions are not corrections for the generality of a rule, but rather for its being simply a bad rule. However, there is no reason to say that the techniques used by equity could not have been adopted by the common law. Moreover, a case can be made that the common law tradition is especially unneedful of a distinct equitable jurisdiction, owing to the central role played by judge-made law. Nonetheless, when later judges clarify implicit rules by distinguishing present cases, this might be seen as a kind of equitable exercise. But, again, this is not unique to equity but is something one finds across the common law. Thus, if there is something distinctive about equity, it will be found in its substantive principles rather than its corrective function.

Equitable Correction of Law

This chapter highlights how equity can coexist with a system of well-crafted rules and shows how American legal realism has impeded equity from correcting the law in its traditional fashion. The baseline is ‘good’ rules, which are those that produce better results by being followed across the board. Yet even good rules will sometimes lead to bad results. If, at the point of application, a decision maker is empowered to deviate from the rule, rules’ coordination benefits can quickly dissipate. Such undermining of the rules of the common law is one of the dangers of equity, which can be seen as having been dampened at one time by the less-than-overt operation of equity when it was separate from law. With the rise of American legal realism towards the end of the process of fusing law and equity, courts and commentators became more sceptical about rules and averse to less-than-transparent legal doctrine, and so equity could no longer limit itself to correcting the law without doing undue damage.