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An account of profits (sometimes referred to as an ''accounting for profits'' or simply an ''accounting'') is a type of
equitable remedyEquitable remedies are judicial remedies developed by courts of Equity (law), equity from about the time of Henry VIII of England, Henry VIII to provide more flexible responses to changing social conditions than was possible in precedent-based common ...
most commonly used in cases of breach of
fiduciary A fiduciary is a person who holds a legal Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by ...
duty. It is an action taken against a
defendant In court proceedings, a defendant is a person A person (plural people or persons) is a being that has certain capacities or attributes such as reason Reason is the capacity of consciously applying logic Logic is an interdisciplinary fi ...
to recover the
profit Profit may refer to: Business and law * Profit (accounting) Profit, in accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic en ...
s taken as a result of the breach of duty, in order to prevent
unjust enrichment In laws of equity, unjust enrichment occurs when one person is enriched at the expense of another in circumstances that the law sees as unjust. Where an individual is unjustly enriched, the law imposes an obligation upon the recipient to make rest ...
. In conducting an account of profits, the plaintiff is treated as if they were conducting the business of the defendant, and made those profits which were attributable to the defendant's wrongful actions. This can be rather complex in practice, because the defendant's
accounting records upright=1.35, Accounting Operations Accounting records are key sources of information Information can be thought of as the resolution of uncertainty; it answers the question of "What an entity is" and thus defines both its essence and the nat ...
must be examined (sometimes by a
forensic accountant Forensic accountants are experienced auditors, accountants, and Detective, investigators of legal document, legal and financial documents that are hired to look into possible suspicions of fraudulent activity within a company; or are hired by a comp ...
) to determine what portion of his gross profits were derived to the wrongful act in question. As a result, mathematical exactness is not called for and reasonable approximation is acceptable. Historically an account was not an equitable remedy, but was an action at common law, and is therefore technically an instrument of law, though it arose at a time before the distinction between law and equity was marked. Co-owners in
concurrent estate In property law Property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the r ...
s also have the right to an accounting of profits, in order to properly apportion income from the use or
leasing A lease is a contract A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is legally enforceable because it meets the requirements and ...
of the property. The remedy is also available against strangers to a trust who "dishonestly assist" an express trustee in a breach of the trustee's fiduciary duty. Case law has shown roughly two approaches to assessing the extent of an account of profits:. # To account not of the entire business but of the particular benefits which flowed to him in breach of his duty; # To account for the entire business and its profits, due allowance being made for the time, energy, skill and financial contribution of the fiduciary (the approach in '' Boardman v Phipps'').


See also

*
Tracing (law) Tracing is a legal process, not a remedy, by which a claimant demonstrates what has happened to his/her property, identifies its proceeds and those persons who have handled or received them, and asks the court to award a proprietary remedy in respe ...
*
Constructive trust A constructive trust is an equitable remedyEquitable remedies are judicial remedies developed by courts of Equity (law), equity from about the time of Henry VIII of England, Henry VIII to provide more flexible responses to changing social conditio ...


References

Judicial remedies Equity (law) {{law-term-stub