(a) Meaning - Equity courts came into existence to do justice. They firmly believed that a person must be prepared to do what is right and fair.
Where a person is under an obligation to do a certain act, and he does some other act which is capable of being regarded as an act in fulfillment of his obligation, the latter will prime facie be so regarded for "it is right to put the most favourable construction on a man's acts, and to presume that he intends to be just before he affects to be generous".
Equity in such cases presumes and imputes an intention that the latter act was intended to be in performance of the former.
(b) Application and cases - The following doctrines and concepts rest on the application of this maxim:
(i) Doctrine of performance and satisfaction - The doctrine of performance in equity is connected with notional performance rather than actual.
"The whole doctrine proceeds upon the ground that a person is presumed to do that which he is bound to do; and if he has done anything, that he has done it in pursuance of his obligation."
Where a donor who is already in obligation to the donee, effects a donation under circumstances which indicate an intention that this shall be taken in satisfaction of a prior obligation, equity in such cases applies the principle by construing his words in such a way as to extinguish the prior claim of the donee. Thus the doctrine of satisfaction is pressed into service in construing instruments.
Thus this maxim is helpful where the presumed intention of the testator is to be found out; where the intention is to express the maxim has no application.
(ii) Ademption - Ademption is a transfer of property which is irrespective of the donor's wish, in law, operates as a complete or pro tanto (proportionately) substitution for a gift previously made by the will of the donor which is unrevoked at his death.
(iii) Doctrine of Presumption of advancement - When a transfer or a purchase of property without consideration is made by a father or a person in loco parentis, to or in the name of a child, a presumption, which in law is known by the terminology of "advancement", is made in order to rebut an ordinary presumption of a "resulting trust", in favour of the father or the loco parentis who paid the consideration.
The doctrine applies to cases of parent and child, husband and wife, of mother and child, and even to an illegitimate child, but not to a man and his mistress.
Thus, the presumption of advancement applies to all cases in which the person providing the purchase money is under an equitable obligation to support, or make provision for, the person to whom the property is conveyed, i.e., where the former is the husband or father of, or stands in loco parentis to, the latter.
(iv) Relief against defective execution of a power of appointment - A power is an authority vested in a person to deal with or dispose of property not his own. A mere power is discretionary, while trust is imperative.
In marginal cases where the distinction between a power and a trust is blurred, equity will not allow an injustice to the intended objects and will take upon itself the duties of the donee of the power.
Where the holder of a power of appointment fails to exercise it or exercise it or exercises it in an unauthorised way, the object of the power takes nothing; of course, there are some statutory relaxations in this regard. In the case of total non-execution of mere power, equity will not aid.
(c) Recognition in India - Section 92 of the Indian Trust Act puts into practice the principle of this maxim. It explains that "where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract". Equity thus imputes an intention to fulfil an obligation.
The doctrine of advancement does not apply in India
Where there is equity, the law shall prevail
Where the equities are equal, the first in time shall prevail
The aforementioned maxims express the principle regarding priority. Questions of priority may arise where there are rival conveyances of land or assignments of benefits in trust funds. These questions are generally a point of consideration with respect to mortgages.