Equity

• 1) Preliminary Injunction
• 2) Permanent Injunction
• 3) Constructive Trusts
• 4) Equitable Liens

• Determine if you're required to discuss a permanent or preliminary injunction.
• Permanent: Issued after full trial on the merits
• Preliminary: issued pending trial on merits.
• If in doubt, lien towards permanent, though this isn't definitive.

• 1) P must establish that there is an 'irreparable' injury.
• 2) P must establish the likelihood/probability of success

• discuss facts in a time frame context.
• one must show he will incur irrparable injury whie waiting for a full trial on the merits; hence he needs relief now.
• Note: Irreparable injury is weighed against any hardship D will suffer if a temporary injunction is granted.

Remember to mention that the court should impose a bond requirement on P to reimburse D if the injunction injures him and P does not succeed.

• Issued pending a hearing to determine whether a preliminary injunction should issue.
• Test:
• 1) irreparable injury to P; and
• 2) likelihood fo success.
• Distinct from a preliminary injunction:
• (i) TRO proceedings can be ex parte for emergencies (though a good faith effort to allow the D to appear is required)
• (ii) thus, no notice is required.
• (iii) no adversarial proceeding is required.
• TRO is limited to 10 days (14 in federal court), after which P must obtain a preliminary or permanent injunction hearing.
• Note - it is very difficult to obtain any type of preliminary injunctive relief that is mandatory inthis form.

• Five-part Checklist (Mnemonic: "I put five bucks down"):
• 1) inadequate legal remedy alternative
• 2) protectible interest requirement
• 3) feasibility of enforcement
• 4) Balancing of hardships
• 5) Defenses

• Rule: P must establish there is no viable legal remedy alternative (P's Burden).
• Four recognized reasons:
• 1) irreparable injury. Note - 'unique' property is regarded as an irreparable injury
• 2) monetary damages would be too speculative
• 3) continuing wrong; injunction avoids multiplicity of actions
• 4) defendant is insolvent

Note - Replevin and Ejectment (remedies for regaining possession of personal and real property) are other legal remedy alternatives.

• Rule: P must show there is a protectible interest involved (P's Burden).
• Examples:
• D builds a fence encroaching on P's property
• D infringes on P's trademark
• D stalks P.

• Rule: the injunction must be enforceable (P's burden)
• Negative Injunctions (requiring D to stop doing something) have no enforcement problems.
• Mandatory Injunctions (requiring D to affirmatively act) - may be an enforcement problem based on (i) the difficulty of supervision or (ii) concern with effectively ensuring compliance.
• Examples:
• 1) complex act involving great taste, skill or judgment; injunction denied.
• 2) a series of acts over a period of time; injunction denied.
• 3) out-of-state act required; granted if D is a resident; denied if D is a non-resident.

• Rule: equity balances P's benefit against D's hardship.
• There must be substantially more hardship than benefit.
• Even then, there will be no balancing of D's hardship if his conduct was willful.
• Hardship to the public is also taken into account (here it would be P's benefit v. D's hardship + public hardship)
• If you decide to balance hardships, in whole or in part, consider the alternative of giving P money damages most of the time. If you deny injunction based on public hardship, grant money damages.
• Balancing hardship is almost always discussed for the torts of nuisance and trespass to land.

• 1) Unclean Hands
• 2) Laches
• 3) Free Speech

• Rule: P's improper conduct will cut off the right to equitable relief, provided however, that the improper conduct must be related to the lawsuit.
• Note - if P is a undeniably bad guy, but his bad qualities have nothing to do with the lawsuit, the defense will not work.

• Rule: Inequitable delay by P in seeking equitable relief cuts off the right to it.
• When does the clock start? When P knows of the injury.
• When does the delay cut off the right to relief? When it has been both unreasonable and prejudicial to the D.
• If laches applies, consider giving P monetary damages

if the tort is defamation or publication of private facts or false light, the best exam answer is to deny the injunction on free speech grounds.

• Imposed on improperly acquired property to which D now has title. D must return the property to P.
• Rules:
• 1) Inadequate legal remedy alternative (i.e. D is insolvent or the property is unique)
• 2) tracing is allowed (i.e. D sold the property and put the cash in the bank)
• 3) Bona fide purchasers prevail over P.
• 4) When D's property cannot be traced solely to P's property, a constructive trust is unavailable.

• Imposed on improperly acquired property to which D now has title. Property will be subject to an immediate court-directed sale. The proceeds go to the P.
• If the proceeds of sale are less than the fair market value of the property when it was taken, a deficiency (money) judgment will issue for the difference and can be used against D's other assets.
• Rules:
• 1) Inadequate legal remedy alternative (i.e. D is insolvent)
• 2) Tracing is allowed
• 3) bona fide purchasers prevail over P.
• 4) When D's property cannot be traced solely to P's property, only an equitable lien is available.

• If the property value subsequent to the taking goes up --> P prefers a constructive trust.
• If property value goes down --> P prefers an equitable lien.
• When D's property cannot be traced solely to P's property, only an equitable lien is available.

• 1) Specific Performance
• 2) Rescission
• 3) Reformation

• 1) K is valid
• 2) performance of P must be assured
• 3) Inadequate legal remedy alternative
• 4) Feasibility of Enforcement
• 5) Defenses

P must show the K is valid (P's Burden)

• P must be able to show his performance is assured (i.e. already performed or ready and able to perform)
• (P's Burden)

• P must show no viable legal remedy alternative(P's Burden).
• Four reasons
• 1) damages are too speculative
• 2) D is insolvent
• 3) multiple suits are necessary
• 4) thing bargained for is unique

• Real Property: land is always unique, even if the question makes it look the same. This applies equally to buyers and sellers. Both can get specific performance.
• Personal Property - General Rule: personal property is not unique; damages are adequate.
• Personal Property - Exceptions:
• 1) one of a kind or very rare
• 2) personal significance to buyer
• 3) circumstances make the chattel unique (e.g. OPEC cuts production, rendering gasoline unique); uniqueness measured at the time of litigation - not at the time of contract formation.

• P must show enforcement is feasible (P's Burden).
• Enforceability of Personal Services Ks: not specifically enforceable b/c of enforcement problem/involuntary servitude
• Covenant not to compete - 2-part test: (1) the services are unique (sales clerk v. president); and (2) the scope (geographic and durational) is reasonable.

• 1) Unclean Hands (same as tort remedies)
• 2) Laches (same as tort remedies)
• 3) Unconscionability
• 4) Mistake (see contract rescission)
• 5) Misrepresentation (see rescission)
• 6) Statute of Frauds (see rescission)

• More than simply a 'bad deal.' There must also be some 'smell factor' that brought it about.
• Tested at the time of contract formation; not the time of litigation.
• Basic Test: whether, in light of the general commercial background and needs of the parties, the contract is so one-sided as to be unconscionable.
• Possible unconscionability in the event of an unfair surprise.

• Vacant Properties Intensify Foreclosure Disaster
• Valid K
• Performance of P Assured
• Inadequate Legal Remedy
• Feasible Enforcement
• Defenses

• Definition: original K is considered voidable and rescinded.
• Analysis (Mnemonic: "Good Dog"):
• 1) grounds for rescission
• 2) Defenses

• 7 General Grounds:
• 1) Mistake
• 2) misrepresentation
• 3) coercion
• 4) undue influence
• 5) lack of capacity
• 6) failure of consideration
• 7) illegality
• ** all of these are problems with formation.

• Material Mistake: Rescission Granted.
• Collateral Mistake: If the mistake was collateral (going to quality, desirability, or fitness for a particular purpose) --> Rescission Denied.

• General Rule: Rescission denied
• Exceptions:
• 1) If the non-mistaken party knows or should know of the mistake, rescission will be granted (different from unilateral mistake defense in reformation).
• 2) Modern Trend Exception: Rescission will be granted if the mistaken party would suffer an undue hardship if rescission were denied.

Rescission Granted - P must show that he actually relied upon the misrepresentation.

• 1) Unclean Hands
• 2) Laches

Notable Non-Defense: Plaintiff's negligence will not serve as a defense.

If P who is entitled to rescission has previously rendered performance on the K, he can be compensated for it or get the property back via restitution.

• Definition: Changes written agreement to conform with the parties' original understanding.
• 3-Step Analysis (Mnemonic: "Very Good Dog"):
• 1) Valid K
• 2) Grounds for Reformation
• 3) Defenses

• Mistake
• 1) Mutual Mistake = reformation granted
• 2) Unilateral Mistake = reformation denied unless the non-mistaken party actually knew of the mistake (no 'should-have-known' exception).
• Misrepresentation
• Misrepresentation = reformation granted for innocent and intentional misrepresentations.

• 1) Unclean Hands
• 2) Laches

Note - reformation is not allowed where it would adversely affect the rights of a subsequent bona fide purchaser.