Boilerplate Series: Equitable Remedies
While legal contracts can be intimidating, many of the provisions actually follow recognizable patterns that can be broken down into simple, comprehensible pieces. Our boilerplate series focuses on the standardized provisions that are typically found at the end of the contract.
Equitable Remedies Clause
Equitable remedies are when a court awards a nonmonetary judgment, such as issuing an order to a person or company to do something (specific performance) or refrain from doing something (injunction). A court will typically award an equitable remedy when monetary relief for a breach of contract is not easily calculable or adequate to fully compensate the non-breaching party.
An equitable remedies clause is often included when a contract places confidentiality or non-compete restrictions on a party. In the event that a party breaches such restrictions, an equitable remedies clause would allow the non-breaching party to seek an order from a court to stop the breaching party from continuing to breach the agreement.
Let’s take a look at a standard, boilerplate equitable remedies clause:
“The parties acknowledge that monetary damages may not provide a remedy in the event of a breach and therefore, in addition to any other rights of the parties, each party grants the other party the right to enforce this Agreement by means of injunction, both mandatory (specific performance) and preventive, without the necessity of obtaining any form of bond or undertaking whatsoever, and waives any claim or defense that damages may be adequate or otherwise preclude injunctive relief.”
In addition to granting the parties the right to seek equitable remedies, an equitable remedies clause often carves out the requirement that a party obtain a bond or other undertaking when enforcing its rights. Many courts require a plaintiff to post some kind of bond when seeking equitable remedies in order to protect against wrongful claims. Because such a bond might inhibit a party’s ability to bring a valid claim, parties will often agree to eliminate the requirement of posting a bond when seeking equitable remedies.
Furthermore, an equitable remedies clause often requires the parties to waive their rights to challenge the availability of equitable relief. Courts are generally not legally required to grant equitable relief and will usually favor monetary relief. So, this waiver language helps a court get comfortable on exercising its discretion to grant equitable relief because the breaching party has already agreed to not challenge any equitable award.
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