Legal Definitions - contravening equity

The term "contravening equity" refers to actions or conduct that go against the fundamental principles of fairness, good conscience, and justice that the legal system of equity aims to uphold.

To understand "contravening equity," it's helpful to first understand equity itself. Equity is a branch of law that developed to provide fair and just remedies in situations where the strict application of traditional common law rules might lead to an unfair or unconscionable outcome. It focuses on principles of fairness, good conscience, and preventing unjust enrichment or the abuse of power.

Therefore, contravening equity means behaving in a way that is considered unjust, dishonest, or takes unfair advantage, especially when there is a duty of trust, a clear understanding, or a moral obligation that should be upheld. When a court finds that someone has contravened equity, it may intervene to prevent an unfair outcome, even if strict legal rules might otherwise allow the conduct.

Here are some examples illustrating this concept:

• Example 1: Breach of Fiduciary Duty

  Imagine a financial advisor who is entrusted with managing a client's investment portfolio. The advisor, instead of acting solely in the client's best interest, secretly invests a portion of the client's funds into a company in which the advisor has a personal, undisclosed financial stake, hoping to profit from both the client's investment and their own. This investment is riskier than what was agreed upon with the client.

  How it illustrates contravening equity: The financial advisor has a "fiduciary duty" – a legal and ethical obligation to act with utmost loyalty and good faith for their client. By prioritizing their personal gain over the client's best interest and making undisclosed, risky investments, the advisor is acting against the principles of trust, honesty, and good conscience. This conduct directly contravenes equity, and a court might intervene to reverse the transaction or order the advisor to compensate the client for any losses.

• Example 2: Unconscionable Advantage in a Contract

  Consider an elderly, vulnerable person who is pressured by a persistent salesperson into signing a contract to purchase an overpriced, unnecessary product with extremely unfavorable terms. The salesperson was aware of the person's diminished capacity and isolation, and exploited these vulnerabilities to secure the sale.

  How it illustrates contravening equity: While the contract might technically be signed, the salesperson's actions of exploiting a vulnerable individual's weakness to secure an unfair deal would be seen as unconscionable and against good conscience. Equity would likely intervene to set aside or modify the contract, as allowing it to stand would be profoundly unjust and would permit one party to take unfair advantage of another's vulnerability.

• Example 3: Breaking a Promise Regarding Property

  A landowner promises their long-term tenant that if the tenant invests their own money and effort into renovating and improving the dilapidated rental property, the landowner will grant them a long-term lease at a fixed, favorable rate. Relying on this promise, the tenant spends a significant amount of money and time improving the property. Once the renovations are complete and the property value has increased, the landowner attempts to evict the tenant to sell the property at a higher price, denying any agreement for a long-term lease.

  How it illustrates contravening equity: Even if there wasn't a formal, written lease agreement for the long term, the landowner's actions would likely contravene equity. The tenant acted to their detriment (investing money and labor) based on a clear promise. For the landowner to then go back on their word and benefit from the tenant's improvements while denying the agreed-upon lease would be considered unconscionable and unjust. Equity might step in to enforce the promise or provide compensation to the tenant, preventing the landowner from unfairly profiting from their broken word.