Equity

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Requirements for equity

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(1) is the legal remedy inadequate

(2) equitable relief if feasible

(3) remedies include injunction, specific performance, rescission and reformation

(4) defenses include unclean hand, time bar (laches), impossibility or undue hardship, freedom of speech

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use of competitor's trade secrets

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NC has enacted the Trade Secrets Protection Act that defines a trade secret as business or technical information including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that derives its value from not being generally known to and not being readily ascertainable by others and is the subject of reasonable efforts to maintain its secrecy. Injunction if information was obtained in a wrongful manner. the court may enjoin the person who has wrongfully taken the trade secret and the person who intends to use it. Infringement arises when a second identical or confusingly similar mark gives rise to public likelihood of confusion as to the source of the goods.

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Injunction are normally not available

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a. Defamation

b. Untrue Statements

c, Trade/ Libel

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Contempt

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Contempt is the method by which courts enforce equitable orders. When a defendant fails to comply with an order, the disobedience is punishable as contempt. Contempt can be characterized as either CIVIL or CRIMINAL, depending mainly on its function. Civil contempt is instuted by a private party, as part of an underlying action, in order to (1) compensate the plaintiff for damages caused by D's disobedience(compensatory civil contempt) (2) compel D's compliance to prevent further losses (coercive civil contempt. Criminal contempt is brought by the government to punish errant behavior. Its purpose is to uphold the dignity of the court. Criminal contempt can be further classified as either direct or indirect. To be held in contempt, the D must have disobeyed a specifically detailed, unequivocal judicial command, and must have had the ability to obey the command.

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Particular application of specific performance to land contracts.

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If a contract to sell real estate is entitled to specific enforcement the doctrine of equitable conversion takes effect. Basically, the buyer is considered the equitable owner of the property upon executing the contract. The seller retains only a security title until the purchase price is paid. Record title is transferred at closing. An important result of this equitable conversion is (1) The buyer has the risk of loss if the building is damged or destroyed before closing. The seller is entitlted to specific performance without a reduction in the price (buyer may have rights in equity, under a constructive trust theory, to any insurance proceeds collected by the seller).

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North Carolina has adopted the Uniform Vendor and Purchaser Risk Act

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The seller has the risk of loss until possession is delivered.

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The tort of unfair competition

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The tort of unfair competition covers a variety of inappropriate business activities. It can involve passing off your product as that of another or interfering with existing business relationships. Using confidential information to competitively injure a person is a "trade secret". If the conduct constitutes the tort of unfair competition, equity will enjoin the conduct. If there is a covenant not to compete, equity will grant specific performance if the contract is reasonable as to (1) the activities prohibited (2) geographic area (3) duration of time. NC will blue pencil an agreement where the restriction is divisible and grant specific performance. Reluctant to rewrite a contract for the parties.

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Recission

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Rescission is a remedy by which a voidable contract is put to an end and the parties are treated as though it had never been made. Equity will rescind a contract if at the time it was entered into there was (1) mutual mistake as to a material fact (2) misrepresentation as to a material fact (3) unilateral mistake will not normally suffice (4) other grounds like duress, undue influence, lack of capacity, or failure of consideration will also justify recession.

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Reformation

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Treats the contract as valid and changes a writing setting forth or implementing the agreement to conform to the originally intended agreement. Since reformation is designed to give effect to contract and to conform the writings to the agreement, reformation requires that there be a valid contract. A writing must be reformed if it is incorrect as result of (1) mutual mistake (2) unilateral mistake coupled with fraud (3) misrepresentation.

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Equitable defenses

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An equitable defense prevents a plaintiff from obtaining an equitable remedy otherwise available. Unclean hands: available if plaintiff is guity of improper conduct with respect to the same transaction involved in litigation. The test is whether the conduct is offensive to the court. The law employs a fixed and arbitrary time bar embodied in statute of limitations. Equity uses a flexible time bar called laches. The defense of laches is available where the plaintiff has delayed bringing suit if (1) the delay is unreasonable based upon when plaintiff obtained knowledge of the wrong and (2) the delay is "prejudiced to the defendant".

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Constructive Trust

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A constructive trust imposes an equitable duty on a defendant to convey property acquired under certain circumstances to the rightful owner. These circumstances include acquisition of title to property by fraud, various other wrongdoings, and mistake. A constructive trust is a fiction that is created by operation of law on the grounds that the constructive trustee would be unjustly enriched if allowed to retain the property. Shifts title to the victim and deprives the undeserving title holder of improper gain.

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Nature of Equitable Lien

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An equitable lien operates as a charge or encumbrance on property and is available where the plaintiff can trace misappropriated funds or other property to its product. The holder of an equitable lien has a security interest to the extent of the benefits unjustly held by the defendant. Used when property has declined in value. Where there is not a severable interest in D's property, against which P is making a equitable claim.