Equitable Relief: How it Works in Practice

What Is Equitable Relief?

Equitable relief is a court-granted remedy that requires a party to act or refrain from performing a particular act in cases where legal remedies are not considered to provide sufficient restitution.

Key Takeaways

  • Equitable relief is granted by a court requiring one party to either act or refrain from taking an action.
  • Equitable relief is usually a remedy for a breach of contract or in cases of intellectual property theft.
  • A common form of equitable relief is the canceling of a contract, which ends all terms and obligations, allowing both parties to return to their pre-contract status.

How Equitable Relief Works

Equitable relief is distinct from a legal claim such as monetary compensation and is employed to prompt or prevent action in cases when a legal remedy would not constitute adequate restitution for the breach of contract or other offense. This prompting often takes the form of a court injunction, which enforces the remedy by punishing non-compliance with civil or criminal penalties.

Jurisdictional clauses that provide for equitable relief often require such cases to include an acknowledgment between both parties that legal relief wouldn't compensate for a breach of contract or that a breach would result in irreparable damages or injury, and acknowledgment between parties that a breach of contract could result in the offended party seeking an injunction or another form of equitable relief.

The offended party must also be found to be entirely free from blame in the dispute. Often called the "clean hands" principle, it can be applied to deny equitable relief if the offended party has not acted entirely in good faith, or has delayed unnecessarily in seeking a remedy.

Equitable relief is not the same as monetary compensation.

Equitable Relief in Practice

Equitable relief is almost always incurred when there has been a breach of contract. A common form of equitable relief will order the rescission of a contract, which cancels all terms and obligations and restores both parties to their pre-contract position. These often occur during contracts involving property because the personal value of property to a party can often extend beyond monetary compensation. A court could order the property to be sold pursuant to the terms of the original contract, or cancel the contract.

Courts could order rectification, a revision to a contract so that it more accurately reflects the intentions of both parties—in essence, stating what had been initially understood. They could also order that the obligations of a contract be fulfilled as initially drafted if they are found to have breached its terms.

Equitable relief is often provided in cases where intellectual property or other sensitive information has been stolen or otherwise ill-gotten. For example, gag orders, which prevent a party from publishing sensitive information, are often issued in cases of intellectual property theft. In these cases, the potential business or reputation challenges of the offending party releasing the ill-gotten information could not be adequately rectified with monetary compensation. 

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.