Equitable Remedies in Illinois Business Litigation

Equitable Remedies in Illinois Business Litigation concept.

In business litigation, monetary damages do not always address the full extent of a plaintiff’s damages. Illinois courts may award equitable remedies in lieu of — or in addition to — a legal remedy. Although a legal remedy may be appropriate to address the financial harm suffered by a plaintiff, an equitable remedy can compel a person to take certain action, or refrain from engaging in specific conduct. Whether you have commenced a lawsuit for a breach of contract, fraud, or another business dispute, an equitable remedy might be awarded in the event a legal remedy cannot adequately resolve the defendant’s wrongdoing.

Equitable Remedies for Illinois Business Matters and Contract Disputes

Equitable remedies are extremely common in breach of contract matters. In addition to the typical legal remedies, various equitable remedies may be available when a party refuses or fails to perform in accordance with the terms of a contract. For instance, specific performance may be ordered when money damages are not sufficient to compensate a plaintiff for a breach. This remedy is usually imposed by a court when the goods or services are unique and there is no other type of remedy that would be adequate.

Other equitable remedies in Illinois business disputes and breach of contract cases may include contract rescission, contract reformation, injunctions, and constructive trusts. The type of remedy imposed will depend upon the circumstances of the case and the harm suffered by the plaintiff.

Types of Injunctions in Illinois Business Matters

One of the most common equitable remedies for Illinois business disputes involving a breach of contract is an injunction. Depending on the facts of the case, an injunction may be issued at the beginning of a lawsuit — or the conclusion of one. Specifically, there are three types of injunctions that may be imposed by a court, including the following:

  • Permanent injunctions — A permanent injunction may be granted if the party seeking it can establish they have a clear right in need of protection and they are likely to suffer irreparable harm without relief. They must also demonstrate that no adequate remedy at law exists, and they are likely to prevail on the merits of the claim.
  • Preliminary injunctions — A preliminary injunction may be issued if a plaintiff can show they meet the same requirements as above for a permanent injunction. However, these types of injunctions are meant to temporarily preserve the status quo while the action is pending resolution, rather than be a permanent remedy.
  • Temporary restraining orders (TRO) — A TRO is an emergency remedy by which a court issues an order mandating that the defendant immediately refrain from performing a certain action until a hearing can be held. Since this is a drastic remedy, it can only be issued under exceptional circumstances and must have a definite duration.

Importantly, all three types of injunctions satisfy the irreparable injury rule. This means that in order for a plaintiff to obtain an injunction, they must show that they will suffer damages that could not be fairly compensated with monetary damages.

Constructive Trusts as Equitable Remedies

A constructive trust can be ordered by a judge as a remedy to prevent unjust enrichment by someone who has wrongfully obtained the property of another. This type of trust is referred to as a legal fiction. Rather than being created by the parties who are subject to them, they are implied by the specific facts of the case and ordered by the court. They do not contain tangible assets. Instead, they are an equitable remedy and created to ensure justice is carried out.

In business litigation, constructive trusts are typically ordered when a defendant has obtained an interest in another’s property due to fraud, a breach of fiduciary duty, or other deceptive conduct. The constructive trust is set up to resolve the unfair situation that has occurred. The trust is set up to change ownership of the property at issue. In other words, when a court orders a constructive trust, the individual or entity currently holding the property no longer owns it. They are simply holding it for the person who was wronged by the defendant’s actions.

Unlike a trust that is created for the purposes of estate planning, there is no trustee. With a constructive trust, the defendant is treated as if they were a trustee acting on behalf of the plaintiff, beginning on the date they obtained the interest in the property. A constructive trust may be ordered as a temporary measure to safeguard the property until the defendant transfers it back to the actual owner. Otherwise, it can be an ongoing trust — in the event the property was converted, an ongoing trust can allow the actual owner to retain the benefits associated with the property.

Contact an Experienced Illinois Business Dispute Attorney

If you’re facing a business dispute, it’s crucial to have the representation of a knowledgeable business dispute attorney to ensure the best possible outcome in your case. Located in Rolling Meadows, Litico Law Group is dedicated to serving the needs of business owners in Illinois and strives to achieve positive results in every matter. We welcome you to contact us at 847-307-5942 to schedule a consultation to learn how we can assist you.

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Categories: Business Dispute