What is a Court of Equity?

"Court of equity n. originally in English common law and in several states there were separate courts (often called chancery courts) which handled lawsuits and petitions requesting remedies other than damages, such as writs, injunctions, and specific performance. Gradually the courts of equity have merged with courts of law. Federal bankruptcy courts are the one example of courts which operate as courts of equity."

A court of equity is also known as an equity court or chancery court. It is a court that passes judgment on disputes by virtue of fairness rather than the law. As the term itself infers, a court of equity passes an equitable decision in disputes. It may be separate and independent from the court of law, or a court of law may also act as a court of equity depending on the judgment given. Bankruptcy courts are one such example of a court of law that also functions as a court of equity.

The principle idea of a court of equity is that a ruling based on the laws may not be fair or equitable to the parties involved, especially the slighted party. Thus, a court of equity provides a more evenhanded decision. Because each dispute is settled by providing a fair decision, a court of equity may not set a precedent. Decisions are made solely on a case-to-case basis and cannot be applied to any other case or to be used in reference to another case.

Despite deciding based solely on equitability, a court of equity still has legal obligations it must fulfill in settling a dispute. However, a judge in a court of equity is not limited to come to a decision based on previous interpretations of the law. A judge from this type of court may have the option to explore every reasonable argument present in the dispute before reaching a decision. As such, courts of equity are seen to be more lenient and more reasonable than courts of law.