Learn more about this separate type of relief that may be awarded in addition to money damages.
When a party to contract suffers loss due to the other party's breach of the contract, the aggrieved party can seek relief from the courts. Judicial remedies for breach of contract are either: legal or equitable.
Legal relief is the most common form of relief in breach of contract cases. The court awards money damages to the party that has suffered a loss.
Equitable relief is the less common but always available form of relief. Equitable relief is purely discretionary and not available as a matter of legal right. Rather, they most often come up when monetary damages are unavailable or inadequate to cover the losses.
Please note that breach of contract cases fall within the subject matter jurisdiction of state courts, and state law governs the award of equitable remedies.
What is Equitable Relief?
Equitable relief typically involves a court-ordered requirement that the parties take certain actions to remedy the breach. Equitable orders are enforced through the contempt powers of the court, which could subject a non-compliant defendant to fines or even imprisonment.
Types of Equitable Relief in Contract Disputes
The most common types of equitable remedies awarded are:
Specific performance (ordering the parties to complete the terms of the contract)
Injunction (ordering a party to stop a particular behavior or relationship)
Reformation (modifying the terms of the contract)
Rescission and restitution (terminating the contract and forcing one party to reimburse the other)
Accounting of profit
Constructive trust (ordering a party to deliver possession or title of real, personal, or intellectual property wrongfully possessed)
Subrogation (ordering one party to act in place of another, entitling them to the rights, remedies, obligations, and benefits)
When is Equitable Relief Unavailable?
First off, there needs to be a contract. Just like for monetary damages, a breach of contract claim is not going to work unless the party can prove the existence of a valid contract.
Typically, the courts will not entertain exercising discretion over equitable relief unless the monetary damages to be awarded are inadequate to make the "victim" whole or wholly unavailable. And the courts will similarly refuse to award equitable relief if it will result in an undue hardship to the breaching party.
Finally, there are some common equitable defenses that can be asserted as an affirmative defense to relief in equity. The doctrine of laches applies when the "victim" delayed asserting its rights for an excessive period of time and that delay has prejudiced the position of the breaching party. And the doctrine of unclean hands applies when the "victim" acted unlawfully, unethically, or in bad faith vis-a-vis the breaching party or the contract. Other equitable defenses include unconscionability, estoppel, and adverse effect on public interest.