What are the two types of legal remedy a business owner should be aware of?

What are Legal Remedies?

A legal remedy – or remedy at law – is where the court awards some form of monetary payment. This can come in various ways, such as punitive damages, reimbursement or monetary damages as compensation. However, they all involve the losing party being out of pocket.

Commonly, this is done to restore parity and put things back to the way they were. This could mean that the injured party is paid compensation equal to their losses or that the defendant loses the value they gained through an unlawful action.

In other cases, the legal remedy approach covers punitive damages, designed to punish the defendant and perhaps teach them a lesson. You might also see the term ‘coincidental damages’ used, which is an amount awarded to the injured party to cover the damage they’ve directly suffered through the unlawful action of the defendant.

What are Equitable Remedies?

Not all disputes can be resolved through a financial award. In other cases, equitable remedies are used to provide a more flexible form of solution. These remedies are an attempt by the court to reach a decision that could be described as being fair to all parties. It’s typically only used when there are no available legal remedies.

A range of measures can be carried out in this case. For example, equitable remedies may involve an injunction, which orders the person named on it to stop doing something such as performing a certain action, offering stated services or going to a specific place.

Other possible outcomes include a rescission, which is where the court dissolves a contract to put the parties involved in it back to where they were before it was signed. A reformation is where the court decides that a contract doesn’t meet its original intention, so orders it to be rewritten.

Restitution is another type of equitable remedy that may be awarded. It’s where the court restores something to its rightful owner after it was wrongfully taken away. A constructive trust is where someone has to transfer property to the injured party, while an equitable lien allows the claimant to take security for a debt over disputed property.

What Else do Business Owners Need to Know?

When running a business, there’s always a risk of running into legal issues. Breach of contract is one of the most common disputes that any business can find itself wrapped up in. This legal problem can occur when the client believes that there has been some sort of failure in the delivery of services or products. Whether they’re the claimant or defendant, the business owner should be aware of the possible ways that the dispute may be resolved.

As we’ve seen, legal remedies and equitable remedies can also be applied to a variety of other situations. While it’s the legal experts on either side who need to make the important decisions, the situation can be dealt with a lot more easily when the business owner has clear information on the different possible outcomes.

The Importance of Getting it Right the First Time

Of course, avoiding time-consuming and stressful legal disputes is one of the main goals of any company. This is why companies pay legal advisors and put a huge amount of effort into avoiding any legally ambiguous activity or information. Whether you’re funding a startup or running a long-standing company, every decision needs to be weighed up with the legal side in mind.

This makes it easy to see why getting the right legal advice to make good decisions is one of the most important areas for businesses to consider. Legal experts such as Samuel L Bray help to inform the next generation of attorneys. As the John N. Matthews Professor of Law at Notre Dame and an elected member of the American Law Institute, Bray’s research focuses mainly on the law of remedies and the law of equity. With a long and distinguished legal career, Bray is the sort of legal expert who helps keep businesses on the right track.

Getting it right at the first time of asking is a hugely important factor. The most crucial aspect that we’ve learned from looking at legal remedies is that there are numerous ways of resolving any problems, but they can be expensive and awkward. Even if you’re convinced that you’re on the right side of the law, this will prove to be an unnecessary distraction that costs you time and money in the long run.

Doing your best to avoid legal issues is always the best approach. However, by taking some time to understand the different remedies that can be used, you get a better feel for what might happen if something goes wrong and you’re dragged into a legal dispute.

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