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What Can ‘Equity’s Darling’ Tell Us About Equity?

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Original languageEnglish
Title of host publicationPhilosophical Foundations of the Law of Equity
EditorsHenry Smith, Dennis Klimchuk, Irit Samet
Place of PublicationOxford
PublisherOUP
Chapter13
ISBN (Print)9780198817659
Publication statusAccepted/In press - 2018

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Abstract

In this chapter, we take a close look at the particular legal dilemma of priority conflict, at law and in Equity. Our aim is to use this dilemma as a prism to examine the unique character of Equity’s contribution to property law, highlighting how the central concept of conscience shapes both the content and structure of equitable rights to assets.
The choice Equity has made ‒ to prefer the purchaser for value without notice over a first-time equitable owner ‒ may look like a straightforward use of the usual building blocks of property law to construct a solution to a specific permutation of this age-old conflict. This is not so. In this chapter, we argue that the choice made by Equity on this occasion reflects its distinctive nature as a body of law that is highly responsive to inter-personal morality. At the same time, its flexibility allows Equity to locate the fine point in which patterns of moral responsibility coincide with efficiency considerations. As a result, Equity is able to develop a solution that is sensitive, so far as is possible, to the incommensurable values that are at play in such an intricate conflict. The distinctive nature of Equity’s solution is particularly clear against the background of the current (i.e. post-1994) English Common Law, which treats these conflicts in a different way from civil systems or the UCC in the USA. The English Common Law solution represents a legitimate, albeit slightly unusual, choice from both efficiency and moral perspectives. However, we wish to argue, its framework does not fit the paradigm situation to which Equity responds, namely that of a competition between a beneficiary under a trust and a purchaser of assets from a trustee acting ultra vires. In a setting of trust, considerations of justice and efficiency call for a different solution from that offered by the Common Law; and Equity ‒ with its habit of fastening on the purchaser’s conscience, and probing into the special circumstances of every transaction ‒ is particularly well-suited to accommodate these considerations.

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