Equity involves treating others fairly to achieve a fair outcome without sacrificing one’s own legal rights. The principle “One who seeks equity must do equity” emphasizes this concept. However, individuals who have violated principles of fairness, such as good faith, are not entitled to seek fair treatment. This is known as the clean-hands doctrine, which means that those with “unclean hands” cannot seek assistance from the court. For instance, someone who unlawfully takes a child from their parent cannot request custody from the court. The clean-hands doctrine is based on the belief that fair treatment is a choice, not an obligation.
When pursuing an equitable remedy, it is necessary to treat the other party fairly while still maintaining one’s own legal rights in order to achieve a just outcome. This principle is derived from the legal maxim “One who seeks equity must do equity.” For instance, if someone wishes to file a lawsuit for child custody, they must demonstrate that they have acted in good faith and have not wrongfully taken the child away from another person or state with custody. This requirement stems from the clean-hands doctrine, which prohibits a party from seeking equitable relief if they have violated an equitable principle, such as good faith. In the given example, the clean-hands doctrine is applied to child custody cases, stating that if someone has acted improperly, they cannot seek custody of the child through equitable relief because they have violated an equitable principle and have “unclean hands.” The clean-hands doctrine is rooted in the discretionary nature of equitable relief in English courts of equity, like Chancery.
Equity refers to the ownership interest or value that an individual or entity holds in a property or business. It represents the residual interest after deducting liabilities from the asset’s value.
Equity represents ownership, while debt represents borrowed funds that need to be repaid with interest. Equity holders have a stake in the profits and losses of a business, while debt holders are entitled to repayment of their loan amount.
There are various types of equity, including common equity, preferred equity, and convertible equity. Common equity represents ownership in a company with voting rights, while preferred equity provides certain preferences or rights to the holder. Convertible equity can be converted into common equity at a later stage.
Equity is calculated by subtracting the liabilities or debts from the total assets of an individual or entity. The formula for equity is: Equity = Assets – Liabilities.
Yes, equity can be transferred or sold to another individual or entity. This can be done through a sale or transfer agreement, which outlines the terms and conditions of the transfer.
Equity holders typically have the right to vote on important matters, such as electing board members or approving major decisions. They also have the right to receive dividends or a share of the profits, and in the event of liquidation, they may be entitled to a portion of the remaining assets.
Generally, equity holders are not personally liable for the debts of a company. Their liability is limited to the amount of their investment or ownership stake in the business. However, there may be exceptions in certain circumstances, such as if the equity holder has personally guaranteed a loan.
In real estate, equity represents the value of a property that is owned outright by the owner, without any mortgage or other liens. It can be built over time through mortgage payments, property appreciation, or improvements made to the property.
Equity in marital property is often divided between spouses during a divorce settlement. The division of equity depends on various factors, including the length of the marriage, contributions made by each spouse, and the applicable laws in the jurisdiction.
Yes, equity can be diluted if additional shares or ownership interests are issued. This can happen when a company raises capital through new investments or when existing equity holders sell their shares. Dilution reduces the percentage ownership of existing equity holders.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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