What You Need to Know About Common Law and Equity

The various legal systems currently enforced around the world are based on different concepts of justice. In many European and Latin American jurisdictions, for example, civil law prevails by virtue of its Napoleonic and Germanic influences. Sharia law is observed in some nations in the Middle East. Common law is the legal system practiced in Anglo-Saxon jurisdictions such as Australia, Canada, the United Kingdom, and the United States.

Common Law Versus Civil Law

Common law is based on the English system of royal courts first established in the 12th century. One of the various defining characteristics of common law is its reliance on legal precedent set by court decisions; this is known as case law.

In civil law systems, case law is rarely utilized because judges base their decisions on legal compendia such as constitutions, statutes, codes, and rules. In some cases, a party pleading a case in a civil law jurisdiction may ask the court to review jurisprudence, which is prior judicial decision considered to be wise and authoritative. Common law systems, on the other hand, allow parties to introduce case law to make their case before the bench.

In the United States, the only jurisdiction heavily influenced by civil law is the State of Louisiana. Some legal scholars consider civil law to be less flexible than common law, but it is important to note that the concept of equity introduces a new dimension of legal justice that can only be achieved in common law systems.

Equity as a Legal Concept

The courts established by English law resulted in one institution known as the Court of Chancery, which focused on cases that should not result in unjust enrichment.

Although the State of Delaware has a Court of Chancery, this is not the only venue where equity can be applied. Civil cases such as lawsuits can be settled based on the validity of the claim, the skill of the attorney with regard to case law and court litigation, and the decision from the bench, but there may still be unresolved issues related to equitable justice.

One example of equity law could be related to car title loans; when borrowers default on these loans, they may lose their interest in the title of the vehicles that they allowed to serve as collateral. A Florida car title lender can file a civil action to enforce the note and take possession of the collateral, but if the loan amount was $500 made on the title of a vintage Shelby Mustang in showroom shape, the borrower can ask the court for an equity remedy.

A vehicle title lender taking ownership of the aforementioned classic Mustang on a $500 defaulted loan could be considered unjust enrichment. In this case, court systems across the U.S. have a right to invoke equitable relief, whereby the judge may not grant transfer of title to the lender; instead, an equitable solution could be to either sell the Shelby Mustang at market value, which would mean hundreds of thousands of dollars, or else allow the borrower to keep the car but pay thousands in fines up to the statutory limits that prevent usury in Florida.

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