Final answer:
The term equity in law denotes the spirit and habits of fairness, justness, and right dealing in interactions between people. It represents a balance between the strict letter of the law and the overarching spirit of fairness and natural justice, ensuring outcomes are fair, even if it requires deviation from established laws.
Step-by-step explanation:
In law, the term equity denotes the spirit and habits of fairness, justness, and right dealing which would regulate interaction between people. Equity is distinct from the concept of justice, as it focuses on the principles of fairness and rectitude that may at times require deviation from strict application of laws, to ensure fair treatment and outcomes. The term encompasses the balance between the letter of the law and the spirit of fairness and natural justice.
While justice includes a set of morals and standards and a system where people are judged and punished based on a common set of laws, equity goes beyond to address the fairness in the application of these laws. An example of equity in practice is the issuance of injunctions or specific performance decrees by courts, which are remedies tailored to bring about a fair result rather than mere reliance on monetary compensation, which might be the just outcome according to the law.
Equity is paramount in legal systems to correct strict rules of law where they might lead to injustice or unfairness. It acts as the conscience of the legal system and seeks to ensure that justice is administered not just legally, but also with moral fairness.