- Date: 14th century
- b : something that is equitable
- 2 a : a system of law originating in the English chancery and comprising a settled and formal body of legal and procedural rules and doctrines that supplement, aid, or override common and statute law and are designed to protect rights and enforce duties fixed by substantive law
- b : trial or remedial justice under or by the rules and doctrines of equity
- c : a body of legal doctrines and rules developed to enlarge, supplement, or override a narrow rigid system of law
- 3 a : a right, claim, or interest existing or valid in equity
- b : the money value of a property or of an interest in a property in excess of claims or liens against it
- c : a risk interest or ownership right in property
- d : the common stock of a corporation
Equity is the name given to the set of legal principles, in jurisdictions following the English common law tradition, which supplement strict rules of law where their application would operate harshly. In civil legal systems, broad "general clause" allow judges to have similar leeway in applying the code.
Equity is commonly said to "mitigate the rigor of common law", allowing courts to use their discretion and apply justice in accordance with natural law. In practice, modern equity is limited by substantive and procedural rules, and English and Australian legal writers tend to focus on technical aspects of equity. There are 12 "vague ethical statements" which guide the application of equity, and an additional five can be added.
A historical criticism of equity as it developed was that it had no fixed rules of its own, with the Lord Chancellor from time to time judging in the main according to his own conscience. As time went on the rules of equity did lose much of their flexibility, and from the 17th century onwards equity was rapidly consolidated into a system of precedents much like its common-law cousin.
The distinction between "law" and "equity" is an accident of history. The "law courts" or "courts of law" were the courts in England that enforced the king's laws in medieval times. Here the King's Judges, educated in law rather than theology, administered the universal law of the realm. This body of law evolved on the basis of previously set precedent into what is recognised as the Common law of England. However, if changes were not quick enough, or if decisions by the judges were regarded as unfair, litigants could still appeal directly to the King, who, as the sovereign, was seen as the 'fount of justice' and responsible for the just treatment of his subjects. Such filings were usually phrased in terms of throwing oneself upon the king's mercy or conscience. Eventually, the king began to regularly delegate the function of resolving such petitions to the Chancellor, an important member of the King's Council. The early Chancellors were often Catholic clergymen or nobles, acting as the King's confessor and thereby literally as keeper of the King's conscience. As a result of their theological and clerical training, Chancellors were well versed in Latin and French languages as well as in Roman civil and canon law, which heavily influenced equity. Soon the Chancery, the Crown's secretarial department, began to resemble a judicial body and became known as the "Court of Chancery".
By the 15th century, the judicial power of the Chancery was recognized. Equity, as a body of rules, varied from Chancellor to Chancellor, until the end of the 16th century. After the end of the 17th century, only lawyers were appointed to the office of Chancellor.
One area in which the Court of Chancery assumed a vital role was the enforcement of uses, a role which the rigid framework of land law could not accommodate. This role gave rise to the basic distinction between legal and equitable interests.