Equity

Front 1

character of equity action

Back 1

- equitable remedies (tortious conduct, specific performance, rescission, and reformation)

- no absolute right to equitable relief, it is discretionary with the ct

- generally will not be granted if it would cause disproportionate harm to the public or the party against whom the relief is sought

equitable remedies will be available where there is no adequate remedy at law

- equity acts upon the person

- equity will not take jurisdiction when there are no practical means to enforce its decree

- ct must have power to force compliance and must be able to determine whether there has been compliance

Front 2

injunctive relief

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personal jurisdiction over D is required

to determine whether IR is appropriate, the following questions must be answered:

1) is the legal remedy inadequate? ex. damages are speculative; D is insolvent; injury is irreparable; multiplicity of actions is necessary; or p has no right to damages (tort is prospective)

2) is enforcement feasible, practicable and effective? negative injunuction is easier to get since so supervision is required. ct must have sufficient contacts with D

3) are the hardships balanced? if the benefit to P is greatly outweighed by the burden on D, the ct generally will not issue an injunction.

4) does the D have any defenses? standard tort and equitable defenses may be available to the D. these defenses are: 1) unclean hands (improper conduct must relate to the same transaction involved in the litigation!! unrelated unfair conduct is irrelevant); 2) laches may be available if P has unreasonably delayed in bringing an action and the delay is prejudicial to the D. laches commences to run when P has knowledge that the right has been infringed. laches cannot be longer than SOL and may serve as an earlier bar; 3) estoppel - available as a defense if one party acts wrongfully or negligently and thereby induces reliance by another who is entitled to rely and who changes his position to his detriment; 4) defenses of impossibility, hardship and freedom of speech: may be defenses to IR

replevin could be inadequate if D could put up a replevin bond for a unique chattel or if there has been a change in the chattel (so sheriff can't identify)

ejectment could be inadequate because the sheriff refuses to act

IR against criminal conduct: generally not available on con grounds as it would deprive defendant of the right to trial by jury. but if crime is also a tort it could be enjoined

IR for political rights: generally not available because of legal remedies, ex. mandamus. but if conduct is tortious, could be subject to relief

enjoining distribution of obscene materials: can be enjoined and actions are to be brought by district atty

Front 3

preliminary injunction

Back 3

purpose: to preserve the status quo

duration: until completion of the judicial proceeding

requirements for issuing: notice and adversarial hearing

aimed at maintaining the status quo until trial on the merits

- do not resolve any permanent rights b/w the parties

- granted only after a regular, adversary-type court hearing. generally remains in effect until conclusion of full trial.

moving party must generally show: 1) irreparable injury if a PI is not granted and 2) likelihood of prevailing at later trial. notice of trial must be given to D

before grant of a PI, p must bond to indemnify the D for damages if it is finally determined that the p was not entitled to the injunction. damages from an improper injunction generally are limited to the amount of the bond

temporary restraining order: may be granted in drastic circumstances. less formal notice required; indeed may be granted w/o notice if the moving party makes a strong showing why notice should not be required. if granted, the issuing court will set a hearing for grant of a preliminary injunction for earliest possible date.

purpose: to preserve the status quo

duration: until hearing on preliminary injunction can be held

requirements for issuing: some notice if practicable

Front 4

permanent injunctions

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exam tip: if question does not tell you what type of injunction is sought: assume permanent. if the question asks about preliminary injunctive relief, be sure to note that the purpose of such relief is to preserve the status quo to prevent irreparable injury

- may be issued only after a full hearing on the merits and are binding on the parties

purpose: to grant the relief sought

duration: as long as necessary

requirements for issuing: notice and adversarial hearing

Front 5

duration of injunction

Back 5

remains in full force and effect until it has been vacated, modified or set aside

- cannot be ignored even if erroneous unless ct was totally w/o jurisdiction

Front 6

IR against torts

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Nuisance: balance hardships

- generally granted only against a private nuisance

- individual will not have the right to enjoin a public nuisance unless he can show that he has standing to sue, e.g. a special injury

Trespass to land: consider balance of hardships. IR is proper where the trespass is continuous

Waste: is it destructive, permissive or ameliorative? generally, equity will not grant IR in ameliorative waste situations

conversion of or trespass to chattels: IR is proper where the interference is continuous or the converted chattel is unique

defamation: equity cts hesitant to enjoin mere libel or slander because of free speech rights

invasion of privacy: in NY, cts have uniformly held that there is no cause of action for invasion of privacy apart from civil rights law (exception for implied promise of confidentiality between doctor and patient)

abuse of judicial process: wrongfully instituted suit or wrongfully obtained judgment. suit ct can enjoin litigants. judgment: fraud is sufficient for equitable relief against enforcement of judgment

Front 7

unfair competition

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1. injunction is generally proper when a D encourages someone to breach a K with, or refuse to do business with, defendant's competitor.

exception - D is exempted from IR if his attempt to induce third parties in their relationship with someone is privileged. privilege test:

1) what kind of relationship is D's conduct affecting?

2) what is the nature of D's conduct?

3) what is the relationship b/w the parties? if D has a responsiblitiy for the 3rd party or a financial interest in the third party, or the third party sought his advice, there is likely privilege.

4) what are D's motives?

5) what social interests might be advanced?

2. competitor's use of trade secrets. ask:

1) is the property a trade secret (info not readily available that gives its possessor a competitive advantage)

2) how was the trade secret taken? (was the secret stolen or memorized? accomplished by improper conduct?) cts are more likely to issue an injunction if the info was wrongfully obtained.

3) what is the relationship of taker to owner? (any fiduciary relationship or contract relationship? if so, injunction is more likely)

4) who may be enjoined? both the wrongful take and/or the person who intends to use the trade secret

5) theories of liability include 1) violation of a property right in the trade secret; 2) breach of fiduciary relationship and 3) breach of K

Trademark infringement: an injunction will be available to prevent infringement of a protectable trademark interest

1) is there a protectable trademark?

2) is there public likelihood of confusion? intention of infringer

3) trademark dilution - majority of jurisdictions do not grant injunctive relief to prevent dilution of trademark

4) otherwise protectable mark can lose its protection if the proprietor does not designate it as a trademark and it becomes generic

Trade name infringement: for IR there must be a secondary meaning present and the infringing name must be so similar as to be likely to cause confusion

copyright infringement: IR is not available for copyright infringement absent compliance with federal law

Front 8

Specific Performance

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remedy that orders one party to a K to perform according to the terms of the K.

P must show: 1) a contract exists (K terms must be somewhat more certain than would a ct in an action at law although parol evidence may be used; there must be consideration); 2) all contractual conditions have been fulfilled; 3) legal remedy is inadequate; 4) enforcement is feasible and 5) there are no defenses available to D

time of the essence clause: requires 1 party to perform within a stipulated period of time. as a general rule, when the party does not perform within the stated period, his contractual rights are void. must be expressly inclued in the K. if absent, reasonable time to perform will be implied. if K is wholly executory, the clause will be strongly enforced. if K is partially executed, ct will seek to avoid the effect of the clause so as to avoid forfeiture. the ct will be likely to avoid the effect of this clause if 1) loss to the other party is small; 2) forfeiting party would suffer hardship; 3) tardiness is de minimis; or 4) seller has performed acts giving rise to a waiver. judicial sale might be appropriate in a given case (what?)

deficiencies: main concern here is whether the seller can deliver the quantity or quality of land promised. if there is a deficiency, the seller may get specific performance only if the deficiency is minor. a buyer, on the other hand, can get specific performance despite substantial deficiecies but will be unable to get SP if the deficiency is very large. if SP is granted, there must be an abatement in price for the deficiency.

marketable title: duty to provide marketable title does not arise until closing.

Front 9

SP - is the legal remedy inadequate?

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Thing bargained for is rare and unique:

1) land - always unique, so buyer and seller can get SP

2) personal property: is it unique in kind, of personal significance to the buyer (reasonable person test) or in short supply? if no, money damages are ok

3) personal services: if unique. if not, money damages are ok. even if services are unique, fear of involuntary servitude problems and difficulty of enforcement.

inadequacy of money damages: money damages may be inadequate when damages are speculative, the D is insolvent, or multiple suits would be necessary

Front 10

SP - is enforcement feasible?

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1) can ct supervise protracted performance and derive a standard to judge performance?

2) can ct reach the def or res and effectively compel performance?

personal services Ks - not deemed specifically enforceable but NY cts will enforce a negative covenant to compete or enjoin an employee whose services are unique from performance or competition

land sale contract - trend is to enforce land sale contracts unless seller brings action and only he and the res are before the ct

Front 11

SP - defenses to defendant?

Back 11

1) standard K defense: statute of frauds, inadequate consideration, misrepresentation, impossibility and mistake.

- exception to statute of frauds: part performance doctrine, may take K out of statute of frauds (allow it to be specifically enforced). examples p. 12

2) misrepresentation to a material factor. concealment of a material fact will prevent SP as long as the party concealing this info stands in a confidential relationship to the other contracting party.

3) mistake: must be bilateral, material and a mistake of fact rather than law. unilateral mistake is a defense to SP only if the nonmistaken party either knew of or reasonably should have known of the mistake

4) equitable defenses: unclean hands, laches, unconscionability (at time of contract formation), and disproportionate hardship

Front 12

SP - particular problems

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noncompetes -

1. employment: services must be unique, covenant must be reasonably necessary to protect legitimate interests of the employer and reasonable as to both geographical scope and duration, covenant must not reasonably burden the parties and covenant must not harm the general public

2. sale of business - enforceable if reasonably necessary to protect the buyer and reasonable in geographical scope and duration

3. sale of goodwill: one ny case has held that the seller of the good will of a business may be permanently enjoined from actively soliciting former customers away from the purchaser of the business

4) trade secrets: specifically enforceable but employee can work for another employer

Front 13

rescission ( no true meeting of the minds)

Back 13

rescission voids the K and leaves the parties as though the K had never been made

grounds for rescission must have occurred either before or at the time the K is entered into:

a) mistake: mutual mistkae will suffice for rescission. mistake must be to a material fact. unilateral mistake will not suffice for rescission. although exceptions. will be available if the nonmistaken party either knew or should have known of hte mistkae

in NY, mistake of law is allowed where it can be justified by analogy with mistake of fact

b) misrepresentation - ct to rescind, there must be a material misrepresentation of fact or law and actual reliance. ex. atty must show client had full knowledge before entering in K with atty. free from fraud or misconception on client's party. atty must show no misconduct

c) rescission may be granted for duress, undue influence, illegality, lack of capacity, or failure of consideration

not necessary for a party seeking rescission to offer to restore to the other party to status quo

usual equitable defenses (unclean hands, laches) are available. negligence is not

Front 14

reformation (meeting of minds but agmt doesn't accurately reflect it)

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reformation:changes in the written agmt to make it conform to the original intent of the parties

to be reformed, valid K must exist in the first place

grounds for reformation: mutual mistake will always suffice. trend is to allow reformation for unilateral mistake where the writing does not conform to the original agmt and one of the parties is aware of this. either fact or law.

misrepresentation is grounds for reformation. could be innocent or fraud.

equitable defenses: laches, unclean hands.

equity courts will not allow reformation where the subject matter of the K sought to be reformed has been sold to a bona fide purchaser for value and without notice

reformation of gifts: instrument conveying a gift may be reformed by the donor if there is a mistake of law or fact. an exception exists where the donee has substantially relied to his detriment on gifts conveyed. a donee may not reform even if the gift instrument does not conform to the original intent of the donor. some cts however, allow reformation where the donee has detrimentally relied on donor's intent which was not expressed in the instrument. donee may have a gift reformed against the donor's heirs.

Front 15

constructive trusts

Back 15

- restitutionary remedy imposed by cts to prevent unjust enrichment when a wrongdoer has gained title to property through misappropriation of another's money or property

- d's title must be traceable solely to the misappropriated property. if established, the ct will force the trustee to convey to the P title to the misappropriated property or its product. this gives P priority over unsecured creditors. the usual equitable defenses are applicable and transfer to bona fide purchaser terminates a P's equitable right to the property.