Equitable Remedies

Question 1

What are the three steps in approaching equitable remedies questions?

Answer 1

1) Are the general requirements to be eligible for equitable relief satisfied?
There are two such general requirements:
A. the legal remedy must be inadequate
B. equitable relief must be feasible

2) What are the PARTICULAR requirements for the particular equitable remedies that could be applicable on the facts of the Bar Exam question?
3) Are there any equitable DEFENSES which would prevent otherwise available equitable relief?

Question 2

When is a legal remedy inadequate? Common examples?

Answer 2

When money damages would not make a P whole.

EX’s:

1. Where the subject matter is unique or rare (includes any real estate).
2. Where setting an amount of damages would be speculative.
3. Where defendant is insolvent (making money damages unworkable).
4. Where multiple lawsuits would be required to protect the plaintiff.
5. Where irreparable harm will occur.

Question 3

What is required for an equitable remedy to be feasible?

Answer 3

One of the following must be present in the forum:

1) The defendant;
2) Property subject to suit

The court must have the capacity to determine (through applicable standards) and supervise compliance (not complex or long term)

Question 4

For which TORTS are injunctions generally available?

Answer 4

1. Continuous/repeated trespass
2. Conversion of unique chattel
   3) Unfair competition

Question 5

For which TORTS are injunctions sometimes available?

Answer 5

1) To eliminate nuisance, provided that it is PRIVATE

2) To prevent waste (damage to real property) - but NOT ameliorative waste

Question 6

For which TORTS are injunctions usually NOT available?

Answer 6

1) Defamation (including commercial defamation)
2) Invasion of privacy

(Rationale: Q concerns with prior restraints)

3. Pending / threatened criminal proceedings

Question 7

What are the requirements for obtaining a temporary (preliminary) injunction?

Answer 7

1) Substantial likelihood the moving party will prevail on the merits;
2) Irreparable harm to the movant unless the status quo is preserved
3) Harm to the moving party outweighs hardship of the injunction to the opposing party
4) Public interest will not be adversely affected by injunction

There must be a hearing and, usually, an injunction bond

Question 8

What are the specific requirements for obtaining specific performance?

Answer 8

1) Valid contract exists (terms must be definite & clear)
2) All contract conditions have been met; AND
3) Mutuality of remedy exists.

Question 9

What does a “time is of the essence” provision require? Is specific performance appropriate if it is not fulfilled?

Answer 9

This provision insists upon full performance by a specified date.

No, unless the court determines that:

a. the delay was very slight (a few hours or days at most);
b. the other party suffered no injury on account of the delay;
c. invalidating the contract would work extreme hardship on the late party; OR,
d. the requirement was waived

Question 10

If a seller cannot convey marketable title specific performance will ordinarily not be
granted unless…

Answer 10

The deficiency is minor (specific performance is appropriate, with a reasonable reduction in price)

The deficiency was waived by the buyer

Question 11

What does mutuality of remedy mean?

When does it exist?

Answer 11

Mutuality of remedy means that one party to a contract is not entitled to specific performance unless the other parties would also be entitled to have the contract specifically enforced.

When both parties are able to perform AND can be bound under the contract

Question 12

If there is a covenant not to compete, equity will grant specific performance if the restrictions are reasonable as to:

The three keys areas of the agreement (all of which must be reasonable) are:

Answer 12

● the employer’s legitimate interests in protecting its business.
● the employee’s fair opportunity to accept other jobs in the industry
● the public interest

1) Specific activities prohibited;
2) Geographic limitations
3) Duration (1 year is OK; 5 is not)

Question 13

In order to be a trade secret (subject to injunction to prevent disclosure), the information needs the following two characteristics:

Answer 13

1) confidential and not otherwise available; AND

2) gives the owner a competitive advantage;

Question 14

What is rescission?

Answer 14

A remedy by which a voidable contract is put to an end and the parties are treated as though it have never been made

Question 15

What is reformation?

Answer 15

The contract is salvaged by changing the terms to conform to the originally intended agreement

Question 16

When will equity cancel a contract (through rescission)?

Is tender (return of all consideration) necessary for rescission?

Answer 16

If, at the time it was entered into, there was:

(a) mutual mistake as to a material fact,
(b) unilateral mistake coupled with either (i) misrepresentation (even innocent) or (ii) some other form of inequitable conduct; OR
(c) some other contract grounds - duress, undue influence, lack of capacity, etc.

No.

Question 17

When will a contract be reformed?

Answer 17

When there was either:

(a) Any mutual mistake; OR
(b) Unilateral mistake coupled with knowing misrepresentation (fraud)

Must be established by clear and convincing evidence!

Question 18

Will the Statute of Frauds block reformation (assuming grounds are proven)?

Answer 18

No.

Question 19

What must the P show to obtain restitution?

Answer 19

That the defendant (1) obtained a benefit from the plaintiff, (2) upon request of the defendant, or in circumstances showing that defendant should have known that P expected recompense.

Question 20

Is restitution available against the Commonwealth?

Against counties/cities/town?

Answer 20

No - immune from suit for equitable causes of action.

Yes.

Question 21

When is a constructive trust an appropriate remedy for achieving restitution?

Answer 21

If the property that a defendant wrongfully obtained can be traced to some asset defendant still has, the court may impose a constructive trust, which in effect declares that the plaintiff is the beneficial owner of the asset and that the defendant must disgorge it in a specified form.

Question 22

What are some other forms of equitable relief?

Answer 22

1) Equitable accounting (court orders review of finances of a party)
2) Receivers (court appoints peson to manages a business or property pending disposition) (drastic step)
3) Partition of property
4) Contribution (D seeks pro rata recovery from joint tortfeasors/obligors)
5) Equitable indeminification (party without fault is liable for damages caused by negligence of another - e.g. vicarious liability)
6) Creditors suits

Question 23

What is the preferred outcome when partitioning property?

Answer 23

Partition in kind: physically splitting the parcel among the owners

If physical division, called “laying off shares” of land, is not reasonably workable, then the property can be sold with the proceeds to be divided. The property should be sold in a manner that generates a good sales price.

An attorney handling such a case can recover the fee from the client who retained the attorney, and from any other co-owner who was not separately represented in the partition suit.

Question 24

When may judgment creditors and lien creditors obtain equitable relief, and by filing what?

Answer 24

When efforts to enforce their rights under a judgment by legal enforcement remedies have failed

A creditors bill

Question 25

When may general creditors bring a creditors bill?

Answer 25

Only when such action is necessary to preserve the assets of a defunct company

Question 26

When do creditors bills typically arise on the bar exam?

Answer 26

In response to voluntary transfers, which can be voided if the creditor can prove: (1) no consideration, (2) that the creditor preexisted the transfer; AND (3) that the debtor was insolvent at the time of the transfer and as a consequence of it

In response to fraudulent conveyances, where the transferor intended to defraud the creditor through the transfer (regardless of solvency)

Question 27

Equitable defenses may raised against all classes of litigants except…

Answer 27

Government bodies and localities

Question 28

When is the defense of unclean hands applicable?

Must the conduct be illegal or actionable?

Answer 28

When the P is guilty of improper conduct proximately related to the same transaction for which the P seeks equitable relief

No.

Question 29

Does the statute of limitations apply to equitable actions?

Answer 29

No

Question 30

When is the defense of laches available?

Answer 30

When the P (adult) waits an unreasonable time before suing, resulting in prejudice to D

Question 31

Is unconscionability available in equitable actions?

Answer 31

Yes, if the consideration for a contract is grossly out of proportion to the true value of the deal

Question 32

When do the defenses of impossibility/hardship apply?

Answer 32

When performance is not within the capacity of the person bound, or when the burden is disproportionate to the benefit

Key point: equity relief is always discretionary

Question 33

How does a party show fraud?

Answer 33

By alleging a knowing misrepresentation of present fact (not opinion or a statement about a future event) seeking reliance by the other party

Fraud must be proven by clear and convincing evidence

Question 34

What is the defense of equitable estoppel?

Answer 34

When a party makes a representation which foreseeably induces someone to act in reasonable reliance, to his detriment, the party making the representation may be barred by this defensive doctrine from asserting rights inconsistent with the representations.