On March 31, Professor Henry Smith delivered his Chair Lecture in honor of his appointment as Fessenden Professor of Law. His lecture, entitled Equity Revisited, explored the relationship between law and equity. He examined, through the lens of economic analysis, equity as a solution to opportunism on the part of those who exploit bright-line law, with a focus on equitable maxims, defenses, and remedies.

Smith began his remarks with a brief overview of equity—a type of court that emerged in the late 14th century and still exists in some U.S. states, including (“very notoriously,” he said) Delaware. There are certain areas of law that correspond to equity jurisdiction, such as mortgages, trusts, guardianship, and charity.

“I think of equity as a mode of decision-making,” he said. “A defined combination of law and equity is likely to be superior to using one or the other decision-making mode alone.”

View Professor Smith’s lecture.

Smith said that equity can be used to combat opportunism, which is behavior that is technically legal but is pursued with a view to securing unintended benefits from the system and cannot be cost-effectively defined or deterred by explicit ex ante rulemaking. Equity addresses this problem by obviating the need to define every possible law violation up front.

“There are some situations where someone really knows what the law is, and they know how best to misuse it. If we announced damage rules for everything, people would cherry pick what rules to violate if they knew what the price of violation would be,” Smith said.

His remarks drew upon private law, which is a focus of not only his research, but also of a project he launched at HLS in 2010. The Project on the Foundations of Private Law is dedicated to the academic investigation of private law, which explores the common law subjects like property, torts and contracts, as well as related subjects that are more heavily statutory, such as intellectual property and commercial law. The Project aims to further the study of these areas, their relationships to and distinctiveness from each other, and questions about the status and nature of private law as a whole.

“Modular rights in private law are vulnerable to actors who have too much information, because they are in a position to engage in opportunism,” Smith said. “To handle this problem ex ante would require very elaborate interface conditions that would undermine the simplicity and flexibility of the modular system.”

Smith concluded with the idea that equity is the missing dimension in jurisprudence.

“Equity serves as a refinement to the law where the law invites opportunism,” he said.

“People sometimes feel that individualized justice isn’t academic enough, but recognizing the missing dimension of equity suggests why we don’t need to be apologetic about individualized justice—and it’s what people expect from the system.”