Tag: Equity

  • Law of Equity Essay Maxims Equitable Remedies

    Law of Equity Essay Maxims Equitable Remedies

    What is the Law of Equity? Maxims, Equitable Remedies, and its Essay; The law of equity began in the court of chancery which stood set up because a fair and just remedy could not give through common law as monetary compensation was not suitable; and, sometimes a well-deserving plaintiff was denied because the writs were quite narrow and rigid. Courts stood guided by the previous decisions and that’s how the twelve maxims existed formulated.

    Here is the article to explain, What is the Law of Equity? also define the Maxims, Equitable Remedies, and its Essay!

    These maxims limit the granting of equitable remedies for those who have not acted equitably. The decisions of the court of chancery and common law were constantly conflicting. This rivalry existed ended in The Earl of Oxford’s case 1615. In which the king stated ‘Where common law and equity conflict equity should prevail’. The two courts are now unified and the same judges give decisions out common law and equity.

    Introduction to Equity Law;

    “Equity is Not Past the Age of Childbearing”. The law relating to equity is largely built on precedent. The rules have stood built upon by previous situations which they have dealt with. Although there has been a lot of disagreement about changing laws and adding to the law of equity; the rules that have stood accepted by proceeding judges became precedent and stand now known as maxims and used as guidelines by the court. I agree with the statement by Denning as equity is born from the interpretation of judges and their problem-solving abilities.

    There are a lot of different rules regarding equity that have all existed created through precedent. It is my opinion that although Equity dates back hundreds of years and the law is still just as relevant. There are alterations to the law as recent as the 1975 Eves V Eves case. I think that as long as there are judges to create precedent there can be new law created in equity.

    The Maxims of Equity;

    These are the general legal principles that have stood adopted through threw following precedent regarding equity. These maxims are the body of law that has developed about equity and this helps to govern the way equity operates. All maxims are discretionary and courts may choose whether they wish to apply these principles.

    Equity will not suffer a wrong to be without a remedy:

    This maxim developed as common law had no new remedies only monetary damages. Maxim must treat with caution as today’s laws stand made by the Oireachtas. Maxim can use by the beneficiary of a trust whose rights existed not recognized by the common law. Equitable remedies such as injunctions or specific performance may give. Attempts to alter this maxim in recent times by Lord Denning were unsuccessful.

    Equity follows the law:

    Courts will firstly apply common law and if this is not fair then an equitable remedy will be provided. This maxim sets out that equity is not in place to overrule judgments in common law but rather to make sure that parties don’t suffer injustice.

    He who seeks equity must do equity:

    A remedy will only be provided where you have acted equitably in the transaction. This maxim is discretionary and is concerned with the future conduct of the plaintiff.

    He who comes to equity must come with clean hands:

    This maxim link to the previous maxim and relates to the past conduct of parties. They must not have had any involvement in fraud or misrepresentation or they will not succeed in equity. A beneficiary failed in their action against the trustees to pay her back the assets of the trust she had already received as a result of a misrepresentation of her age.

    Delay defeats equity:

    Laches is an unreasonable delay in enforcing a right. If there is an unreasonable delay in bringing proceedings the case may exist disallowed in equity. Acquiescence is where one party breaches another’s rights and that party doesn’t take any action against them they may do not allowed to pursue this claim at a later stage. These may exist used as defenses about equity cases.

    For a defense of laches, courts must decide whether the plaintiff has delayed unreasonably in bringing forth their claim and the defense of acquiescence can use; if the actions of the defendant suggest that they are not going ahead with the claim; so it is reasonable for the other party to assume that there is no claim.

    Equality is Equity:

    Where more than one person exists involved in owning a property the courts prefer to divide property equally. Prefer to treat all involved as equals. In the case of a business, any funds leftover from dissolution should stand divided equally.

    Equity looks to the intent rather than the form:

    The principle established in. This maxim is where the equitable remedy for rectification stood established this allows for a contract to correct when the terms do not correctly record. This maxim allows the judge to interpret the intentions of the parties if the terms don’t record properly.

    Equity looks on that as done which ought to have been done:

    The judges look at this contract from the enforceable side and the situation they would be in had the contract stood completed.

    Equity imputes an intention to fulfill an Obligation:

    If a person completes an act that could exist regarded as fulfilling an original obligation it will take as such.

    Equity acts in personam:

    This maxim states that equity relates to a person rather than their property. It applies to property outside a jurisdiction provided that a defendant is within the jurisdiction. English court ordered specific performance on land in the US.

    Where the equities are equal, the first in time prevails:

    Equity law, Where two parties have the right to possess an object the first one with the interest will prevail.

    Where the equities are equal, the law prevails:

    Where two parties want the same thing and the court can’t honestly decide who deserves it most they will leave it where it is

    Equitable Remedies;

    The following Equitable Remedies below are;

    Injunction;

    This is an order by the court to make a party complete an action or to make them refrain from doing an action. It exists awarded to protect a legal right rather than compensate for the breach of one. If a party breaches this court order it is a serious offense and can merit arrest or possible jail sentence. The reason for injunctions is that money would be an inadequate remedy for breaching the person’s right.

    An injunction is a discretionary remedy that courts will only grant if they feel it is just and equitable in the circumstances to do so. Interim and interlocutory injunctions are temporary and last up until a specified date or until a trial hearing. Injunctions can exist used to stop trespass, pass off, prevent illegal picketing, and freeze assets. The conduct of the parties will also affect whether the judge will grant them an injunction.

    Interlocutory Injunction;

    Granted before a court hearing because the plaintiff may suffer unrepairable damage if the right exists breached which cannot exist compensated by money. The plaintiff must prove to the judge that there is sufficient reason to believe that the damage will exist caused to them.

    Three-stage test on granting interlocutory injunctions existed introduced in the English case (American Cyanamid) this stood accepted and followed as law in the Irish case:

    • If it is a serious and fair issue that will tried you need not prove it’ll be a successful claim.
    • Set out if damages would be a suitable remedy. It must be impossible to quantify damages and must give an undertaking which means in the event of an injunction not being granted they must compensate the other party for any losses.
    • Whether it is convenient or not to grant the injunction. The need for the plaintiff to protected must outweigh the right of the other party to grant the injunction.
    Qui Timet Injunction;

    Prevents an act before it has stood committed it may fear or could have existed threatened. The plaintiff must show that there is a strong possibility of this happening and the consequences of the act will be extremely damaging. The burden of proof is higher than a normal injunction.

    Mareva Injunction;

    This type of injunction can also stand known as a freezing injunction. Where one feels that they have a substantial case against the other they can apply to the courts for this only if they feel that the other may move of hiding assets. To gain this type of injunction plaintiffs must prove that they have a substantial case and must also prove that the assets are at risk. It must also be convenient to grant it.

    This type of injunction stood introduced in the Nippon Case 1975 by Lord Denning where the defendant owed money to the plaintiff he existed not allowed to take out the amount he had owed from his account. This became another instrument of law when it stood confirmed in the Mareva Case.

    Anton Piller Order;

    This can also be known as a search order. It was thought of to prevent the defendant from destroying anything that could exist used by the plaintiff in court to assist their trial. It is granted without the other party’s knowledge to maintain the element of surprise. The order requires the defendant to allow the plaintiff or a representative to enter his premises and to collect what is relevant for evidence.

    If the defendant does not follow the order then he shall be held in contempt of court. It is only granted where it is deemed to be necessary where it is feared that vital evidence will be destroyed. The order takes its name from the 1976 Anton Piller KG v Manufacturing Processes Ltd case

    Specific Performance;

    Is a form of injunction where a court orders an individual to complete a specific task which is generally part of a contract. This remedy is discretionary and only used when an individual cannot exist compensated by money. If they do not complete the contract they will exist held in contempt of court.

    Rescission;

    This remedy aims to return parties to the position they were in before they entered into the contract. The main grounds for rescission are mistake, misrepresentation, undue influence, and unconscionable transactions.

    Law of Equity Essay Maxims Equitable Remedies Image
    Law of Equity Essay Maxims Equitable Remedies; Image by Free-Photos from Pixabay.
  • Difference between Equity instruments and Debt instruments

    Difference between Equity instruments and Debt instruments

    Equity instruments vs Debt instruments; Equity instruments allow a company to raise money without incurring debt. While Debt instruments are assets that require a fixed payment to the holder. Both equity and debt investments can deliver good returns, they have differences with which you should be aware. Debt investments, such as bonds and mortgages, specify fixed payments, including interest, to the investor.

    What is the difference between Equity instruments vs Debt instruments? with Comparison;

    The equity and debt investments argument has been ongoing in the investment world for years. Equity investments, such as stock, are securities that come with a “claim” on the earnings and/or assets of the corporation. Common stock, as traded on the New York or other stock exchanges, is the most popular equity investment.

    As an investor, we should know the ins and outs of the different financial assets and then choose that which suits our goals. So, Capital is the basic requirement of every business organization, to fulfill the long term and short term financial needs. To raise capital, an enterprise either used owned sources or borrowed ones. Owned capital can be in the form of equity, whereas borrowed capital refers to the company’s owed funds or say debt. The equity and debt investments come with different high returns and risk levels.

    Meaning and definition of Equity instruments:

    Equity instruments (stock or share) allows the investor to buy an ownership stake in the company. Equity refers to the Net Worth of the company. It is the source of permanent capital. It is the owner’s funds which are divided into some shares. Fortunes can make or lost with equity investments. Any stock market can be volatile, with rapid changes in share values.

    Often, these wide price swings do not base on the solidity of the organization backing them up but on political, social, or governmental issues in the home country of the corporation. Equity investments are a classic example of taking on a higher risk of loss in return for potentially higher rewards. Equity instruments are papers that demonstrate an ownership interest in a business.

    More things;

    Unlike debt instruments, equity instruments cede ownership, and some control, of a business to investors who provide private capital to a business. Stocks are equity instruments. Two main types of stocks exist. The first type prefers stock. The second type is common stock. Businesses issue stock in shares and, typically, the greater the amount of shares a single investor possesses, the greater the ownership interest in the company.

    Equity holders incur greater risk than debt holders because equity holders do not enjoy priority in a bankruptcy proceeding. However, equity holders earn greater returns if the business succeeds. Where credit instruments provide set payments over a set period, equity instruments typically provide a variable return based on the business’ success. Therefore, if the business does extraordinarily well, equity investors may see a much healthier return than creditors.

    Meaning and definition of Debt Instruments:

    A debt instrument is an electronic obligation or any paper that permits an issuing party to raise funds by assuring it to pay back a lender by the terms and conditions of a contract. Debt investments tend to be less risky than equity investments but usually offer a lower but more consistent return.

    Money raised by the company in the form of borrowed capital is known as Debt. It represents that the company owes money to another person or entity. They are less volatile than common stocks, with fewer highs and lows than the stock market.

    The bond and mortgage market historically experiences fewer price changes, for better or worse, than stocks. Also, should a corporation be liquidated, bondholders are paid first. Mortgage investments, like other debt instruments, come with stated interest rates and are backed up by real estate collateral.

    Debt instruments are the instruments that are used by the companies to provide finance (short term or long term) for their growth, investments, and future planning and come with an agreement to repay the same within the stipulated period.

    More thing;

    Long-term instruments include debentures, bonds, long-term loans from the financial institutions, GDRs from foreign investors. Short-term instruments include working capital loans, short-term loans from financial instruments.

    Debt instruments are typically agreements where a financial institution agrees to loan borrower money in exchange for set payments of principal and interest over a set period. Debt instruments typically involve loans, mortgages, leases, notes, and bonds.

    Anything that obliges a borrower to make payments based on a contractual arrangement is a debt instrument. Debt instruments can be secured or unsecured. Secured debt involves placing an underlying asset as security for the loan where, through the legal process, the lender can take possession of the underlying asset if the borrower stops making payments.

    Unsecured debt base only on the borrower’s promise to pay. If business files for bankruptcy, creditors take priority over investors. Within the creditors, secured creditors take priority over unsecured creditors.

    Comparison of Equity instruments and Debt instruments:

    The following 6 comparisons of equity vs debt instruments below are;

    1] Meaning:

    Equity instruments allow a company to raise money without incurring debt, and they have used the holders to give money in exchange for a portion of the company. It funds raised by the company by issuing shares knows as Equity.

    While Debt instruments are assets that require a fixed payment to the holder, they are mortgages and government bonds. It funds owed by the company towards another party knows as Debt.

    2] Nature:

    Equity instruments are the nature of return Variable and irregular, In contrast to the return on equity calls a dividend which is an appropriation of profit.

    While Debt instruments are the nature of return Fixed and regular, and Return on debt knows as interest which is a charge against profit.

    Equity investments offer an ownership position in the company. Owning a stock makes the investor an owner of the organization. The percentage of ownership depends on the number of shares owned as compared with the total number of shares issued by the corporation. Also, the number of fund shares is its own funds.

    While Debt instruments, whatever they may call, are corporate borrowing. Instead of procuring a straight commercial bank loan, the organization “borrows” from a variety of investors. This is why debt instruments, such as bonds, come with a stated interest rate, as a loan would. Also, the number of fund shares is the borrow funds.

    4] Types:

    Equity instruments are the types of investment in Shares and Stocks. While Debt instruments are the types of investment in Term loans, Debentures, Bonds, etc.

    5] Goals and Risk:

    Depending on your investment goals, these differences may strongly influence your preferences. All investments come with risk. However, debt instruments offer less risk than equity investments.

    Your investing targets may favor equity investments if you’re seeking striking growth or profit potential. Conversely, you might focus on debt instruments when you prefer consistent income and less risk. Tailor your investment actions to match your objectives and risk tolerance.

    Equity instruments are the types of investment in the long term, so that high risk. While Debt instruments are the types of investment in the comparatively short term, so that low and less risk.

    FAQs

    1. What are equity instruments?

    Equity instruments are securities that provide ownership stakes in a company. They distribute the company’s net worth among shareholders and can include stocks or shares. Investors earn returns based on the company’s performance and may benefit from dividends or capital appreciation.

    2. What are debt instruments?

    Debt instruments are financial assets that represent a loan made by an investor to a borrower. This can be in the form of bonds, mortgages, or other contractual agreements, where the borrower acknowledges a debt and promises to pay interest and repay the principal at specified intervals.

    3. How do equity instruments generate returns?

    Equity instruments typically generate returns through dividends (profit distributions) and capital gains when the stock price increases. Returns can be variable and depend on the company’s financial performance.

    4. How do debt instruments generate returns?

    Debt instruments generate returns primarily through fixed interest payments made to the investor at regular intervals until the instrument matures. They tend to offer more consistent but typically lower returns compared to equity investments.

    5. What are the main differences between equity and debt instruments?

    The primary differences include:

    • Ownership vs. Obligation: Equity instruments provide ownership stakes, while debt instruments represent obligations to repay borrowed funds.
    • Return Nature: Equity returns are variable and depend on company performance; debt returns are fixed and regular.
    • Risk Levels: Equity investments are generally riskier, offering higher potential returns, whereas debt instruments are considered safer but with lower returns.

    6. Which is riskier: equity or debt?

    Equity instruments are generally considered riskier than debt instruments. While equity has the potential for higher returns, investors may also face greater losses if the company does poorly. Conversely, debt investments usually carry lower risks, as they provide fixed payments and priority in the case of bankruptcy.

    7. Can an investor hold both equity and debt instruments?

    Yes, an investor can hold both types of investments as part of a diversified portfolio. This strategy can help balance risk and return by combining the growth potential of equities with the stability of debt securities.

    8. How does one choose between equity and debt investments?

    When choosing between equity and debt investments, consider your financial goals, risk tolerance, and investment horizon. Equity may be more suitable for those seeking capital growth, while debt may appeal to those looking for steady income with lower risk.

    9. What are some common equity instruments?

    Common equity instruments include common stocks, preferred stocks, and real estate investment trusts (REITs).

    10. What are some common debt instruments?

    Common debt instruments include bonds, debentures, loans, and mortgages.

    11. What happens in bankruptcy for equity and debt holders?

    In a bankruptcy proceeding, debt holders are prioritized over equity holders. This means that debt investors will be paid back before equity investors receive any returns, if at all. Equity holders may lose their investment, whereas debt holders may recover a portion of their lent capital depending on the company’s liquidated assets.

  • Equity Shares: Explanation, Characteristics, and Features

    Equity Shares: Explanation, Characteristics, and Features

    Equity Shares: Explanation, Characteristics, and Features

  • Why Entrepreneurs Required the Capital? to Pursue Business!

    Why Entrepreneurs Required the Capital? to Pursue Business!

    Entrepreneurs Required the Capital; Founders design startups to effectively develop and validate a scalable business model. First, You’ve dreamed of starting a business for years, and now you’re on the verge of making it a reality. You can hardly contain your excitement. Whether you’re selling a product or service, you’ve got a lot to offer the world. But for Entrepreneurs, the best business plans can be thwarted by a lack of start-up capital. So, what is the question we are going to discuss; Why Entrepreneurs Required the Capital? to Pursue Business!

    Here are the Guidelines that how to set up a Business? Learn more about Why Entrepreneurs Required the Capital? or Why Entrepreneurs need the Capital!

    A startup or start-up is started by individual founders or entrepreneurs to search for a repeatable and scalable business model. Business is primarily done for the sake to earn the profit and secondly to satisfy the demand another customer, both the objects are reciprocal of each other because of the business does not fulfill the demands of the customer.

    Then, it could never be able to earn profits and if it could be able to fulfill the demands of the customers then sometimes positively the entrepreneur has to raise the capital in the business to med the market ends by fulfilling the demands and supply of the market to balance the business activities, but they are more difficult for the entrepreneur to raise capital at the 24 hours. Therefore, he has to evaluate the business position in all the respect and as well as the market conditions.

    The following concept explains why Capital is Required:

    At Increasing the Volume of Sale and Production:

    When the sales and the production demands rise from the limits and volume of capital already invested in the business then the business requires more capital to compete for the market and production demands. This is a positive trend for the raising of business capital because in such trends the profits of the business increase.

    When Launching a New Product or Brand:

    According to Boston Consulting Group when an organization introduced a new product in the market at such a situation it has to be introduced in the market and the same should be familiar to the interested groups of the market, such product at this step is the question mark in the market because at such situation it has to gain the acceptance of the customers.

    This is the closing stage of the new brand until it attain the acceptance of the market stakeholders and therefore, in such circumstances, the organization or concern need capital for the proper launching, marketing, and publicity of the brand that at an early stage as much as it could possibly be introduced to more and more stakeholders.

    Commencing New Project:

    It is a good step for all the businesses when the business achieve its settled goals and objective and go for a new one but in the same time this is the situation when the same business is going to take a risk of new project whether such project is in connection to the last projects or is new project according to the market situation and demands.

    At such a stage, the organization is of the need to plan and arrange funds to meet the requirements of the project, so that the project could be started in time and the objectives, so predicted could be achieved.

    Sudden Loss:

    Sudden loss is the situation which some time complete ruin the business activities and sometimes require more capital to survive in the market. Such losses often happen in uncertainties or natural uncertainties such as earth quite, storms, economic crisis, the death of the partner and etc.

    In all the above-referred situation a business requires capital, sometimes such demand is for prosperity and progress of the concern but on the other hand sometimes it is for to survive in the market, therefore, every business strategy when it is preparing it is prepared the prosperous happening but by neglecting uncertainties, that’s why such loss is called sudden losses.

    Some Sources of Capital to Start a Business:

    There is no one best way to get funding for a small business. There are multiple types of business financing options available. One way to finance a start-up business is by approaching a bank for a start-up capital loan. While this is a typical method for funding a new business, investors are also a good place to start.

    There are thousands of businessmen and women who are always looking for a business to invest in. The positive of securing a private investor is that they share the financial risk with you. Having a stake in the business gives investors the motivation to make sure you have everything you need to make the business successful. Another option is the Individual Development Accounts (IDAs).

    These are grants with strings attached. IDAs are savings accounts that match the deposits of individuals with modest means. For every dollar saved in an IDA, savers receive a corresponding match. Savers agree to complete financial education classes and use their savings for an asset-building purpose, such as to capitalize a business.

    Requirements will vary by location. Another possibility is forgivable loans. This type of loan is made with the understanding that if the borrower meets certain requirements, repayment of the loan will not be required. A forgivable loan is actually a grant; but, a stipulation may be that you are required to hire and train employees, for example.

    10 things are explained How to collect capital for your startup Business:
    • Bootstrapping.
    • Crowd-funding As A Funding Option.
    • Get Angel Investment.
    • Get Venture Capital.
    • Get Funding From Business Incubators & Accelerators.
    • Raise Funds By Winning Contests.
    • Raise Money Through Bank Loans.
    • Get Business Loans From Microfinance Providers or NBFCs.
    • Govt Programs That Offer Startup Capital, and.
    • Quick Ways To Raise Money.

    Funding Options to Raise Capital:

    The main element which is the basic need of every business is the financial resources available with the entrepreneurs for the commencement of the business, with the passage of time and by the growth of the concern these requirements changed and increased consistently to the business situations.

    At the eleventh hours, it is more difficult for the entrepreneur to obtain those resources therefore, the entrepreneur has to increase the capital if he posses the funds otherwise he has to raise funds as loans from friends or alternatively has to secure loans and finances from the banks.

    Managing of funds from Asset Management:

    When the business required capital than first of all the management of the business observe and evaluate the position of the business that how they can generate funds and the first step which the management take for the managing of the funds or raising the capital is asset management.

    It is a crucial process for the management of funds because it creates more liabilities and requires more calculation of the facts and availabilities with the organization.

    #Working Capital Financing:

    Having dealt with the size of investment in current assets, the methods of financing of working capital needs our attention. Working capital is financed both internally and externally through long-term and short-term funds, through debt and ownership funds. In financing working capital, the maturity pattern of sources of finance depended much coincide with credit period of sales for better liquidity.

    Generally, it is believed that funds for acquiring the fixed assets should be raised from long term sources and short-term sources should be utilized for raising working capital. But in recent modern enterprises, both types of sources are utilized for financing both fixed and current assets.

    #Equity Financing:

    Equity financing means the capital which the owner of the business invests in the business at the starting stage. Equity is capital invested in a business by its owner and it is “at risk” on a permanent basis. Equity finance does not require collateral and offers the investor some form of ownership position in the venture.

    All ventures have some equity, as all ventures are owned by some person or institution. Although the owner sometimes not be directly involved that is provided by the owner. The liabilities in respect of equity financing vary in lieu of the amount of equity as well as in regard to the size and nature of the concern.

    Generally, capital or the equity may be fully invested by the entrepreneur such as an educational institution or food places. Ventures of multiple levers require more than one entrepreneur which also include and consist of private stakeholders or venture equity introduced by the entrepreneurs. Equity is generally on debt financing basis which inconsistency make the capital base of the venture.

    Why Entrepreneurs Required the Capital to Pursue Business
    Why Entrepreneurs Required the Capital? to Pursue Business! #Pixabay.

    #Debt Financing:

    Debt financing is also called asset-based financing. Debt financing is the financing method involving a bearing instrument, usually, a loan debt financing requires the entrepreneur to pay back the number of funds borrowed as well fee expressed in terms of the interest rate. Short term debt (less than one year), the money is usually used to provide working capital to final inventory, account receivable, or the operation of the business. Introduction to Public Finance, Expenditure, Revenue, and Debt.

    The funds are typically repaid from resulting sales and profits during the year. Long term debt (lasting more than one year) is frequently used to purchase some asset such as machinery, land, building or vehicle. The entrepreneur needs to be careful that the debt is not so large that regular interest payment becoming difficult. Small enterprises have fewer choices than large firms for obtaining debt financing.

    They are excluded from financial resources such as money raised through the sale of bonds, debenture, and commercial paper. Commercial banks provide unsecured and secured loans. An unsecured loan is a personal or signature loan that grants on the basis of business strength and reputation.

    An unsecured loan is usually a small loan but they can be quite useful for meeting emergency cash flow requirements such as paying wages or bills. The unsecured signature loan usually must be paid back within the year and they will have high-interest charges. The entrepreneur also establishes personal “lines of credit” through their banks and these are treated in the same way as a credit card account that must be paid down or cleared each month.

    The secured loan is those with security pledge to the bank as assurance that the loan will be paid. There are too many types of security will consider, such as a guarantor, another creditworthy person or company that agrees to pay the loan in the vent the borrower default but the most security is in the form of tangible assets pledged as collateral.