Equitable remedy

What is an equitable remedy?

An equitable remedy is an action enforced by a court in the event of a breach of contract. Its intention is to restore the original conditions for the injured party. Equitable remedy can come in different forms and is used when a court decides that paying a fine after a breach of contract is not sufficient to compensate the injured party.

Types of equitable remedy

Specific performance

Specific performance is a court order to complete the contract as intended. While this may seem like the most reasonable solution for any breach of contract, this may not always be the case. If the object of the original contract can easily be replaced otherwise, a completion would be unnecessary. If the contract involves a unique item, however, the plaintiff would naturally be interested in the breaching party fulfilling their contractual duties. In this case, the plaintiff has to prove the uniqueness of the object.

Contract rescission and reformation

In some cases the court may decide to rescind or cancel the breached contract.

It is also possible to order a new contract written to better suit both parties’ needs (contract reformation). This can only be applied, if a valid contract already exists and one of the clauses or terms in it is wrong or misrepresented.

Restitution

Restitution can be applied when a contract was breached due to a wrongful contract term or clause. In this case the non-breaching party receives what they already provided the breaching party. No penalties are applied. The intent is to restore the original state.

Injunction

An injunction is an order not to perform a specific action. Examples for this would a non-disclosure agreement or a non-compete agreement. They order a party to either not disclose confidential information about the other party or to not work with a competitor of the other party after working with them. Violating such an injunction can result in the breaching party being held in contempt of court.