Equity Looks to the Intent Rather Than the Form

Meaning:

As is seen before, Common Law was very rigid and inflexible. It could not respond favourably to the demands of time. In respect of acquisition and transfer of property, it regarded the form of a transaction to be more important than its substance. Moreover, it expected the contracting parties to rigidly observe their agreements and to perform their stipulations to the very letter of every promise or agreement. Common Law thus was fond of mere technicalities. But, as expressed by Romily in Parkin Case, “courts of equity make a distinction in all cases between that which is matter of substance and that which is matter of form; and if they found that by insisting on the form, the substance will be defeated, they hold it to be inequitable to allow a person to insist on such form, and thereby defeat the substance. Equity thus looks to the spirit and not to the letter, it looks to the intention of parties and not to the words, and it looks to the realities rather than to mere appearances. Instead of swimming on the surface of mere form, it penetrates through the external form of a transaction to discern and decide the real intention of the parties, because the external form of a transaction cannot be allowed to conceal or throw a cloak on the real object, purpose and consequences of a transaction.

Application and Cases:

In case of sale of land, if a party fails to complete it within the time fixed for it, he is at Common Law, in breach of the contract, but equity did not take this rigid attitude. It allowed a reasonable time to the party concerned to complete it. Moreover, in case of construction and enforcement of an agreement equity did not give undue importance to its negative side but looked through the document to find out its real substance and intent.

The application and working of this maxim can well be examined from the following instances:

1) Relief against penalties and forfeitures:

Common Law courts insisted of the rigid and litera scripta (to the very letter) performance of all agreements and promises. In cases of contracts when there was a provision to forfeit a certain amount or to charge penalty in case of breach of contract, Common Law imposed these on the party in default. It may be that the actual damage sustained was less. This unjust situation was relieved by equity by interpreting the purpose and intent of the contract itself. The principal object of the contract lies in its performance and not imposition of penalty. The damage sustained may be therefore compensated, imposition of penalty and forfeiture being subsidiary.

2) Relief in regard to precatory trusts:

A trust is created when the author of the trust indicates with reasonable certainty by any words or acts —

            a) An intention on his part to create a trust thereby;

            b) The purpose of the trust;

            c) The beneficiary; and

            d) The trust property.

In case of precatory trusts, the author of the trust in raising the trust does not use express and unequivocal words but express his desire by such words as ‘I hope’, ‘I request’, or ‘I recommend’, giving thereby a latitude to the trustee so as to ignore the request of the author.

3) Relief in regard to mortgages:

A mortgage is a conveyance of property whereby one person (mortgagor) secures to another (mortgagee) the payment of money whether already owing or advanced at the time or to be advanced (called mortgage debt). Mortgage is treated as a security for debt and thus differs from sale. The mortgagor has a right to obtain his property back by payment of the debt and that is his right of redemption. The mortgagee has a right to repayment of his advance and in case of default by the mortgagor of the mortgagee can exercise his right to recovery of his amount by foreclosure or by getting the property sold. The mortgagor’s right to redemption is guarded by courts and this has been expressed in a well-known legal maxim, “once a mortgage, always a mortgage, and nothing but a mortgage.” Lord Davey observed in the case of Noakes & Co. vs Rice, “a mortgage can’t be made irredeemable and a provision to that effect is void.”

4) Attitude in regard to statute of frauds:

 Where a contract which though required to be in writing, was, due to the defendant’s fraud, nor reduced to writing, equity granted relied and the statute was not allowed to be pleaded as a defence against specific performance.

Recognition in Bangladesh:

The principle in the maxim has been recognised under the Bangladesh Contract Act and the Transfer of Property Act.

Read Also

• Equity Follows the Law
• HE WHO SEEKS EQUITY MUST DO EQUITY
• HE WHO COMES INTO EQUITY MUST COME WITH CLEAN HANDS
• Equity will not Suffer a Wrong to be Without a Remedy