An account of profits (sometimes referred to as an ''accounting for profits'' or simply an ''accounting'') is a type of

equitable remedy Equitable remedies are judicial remedies developed by courts of equity from about the time of Henry VIII to provide more flexible responses to changing social conditions than was possible in precedent-based common law. Equitable remedies were gra ...

most commonly used in cases of breach of

fiduciary A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for exa ...

duty. It is an action taken against a

defendant In court proceedings, a defendant is a person or object who is the party either accused of committing a crime in criminal prosecution or against whom some type of civil relief is being sought in a civil case. Terminology varies from one jurisd ...

to recover the

profit Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit (real property), a nonpossessory inter ...

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 re ...

. 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 must be examined (sometimes by a

forensic accountant Forensic accountants are experienced auditors, accountants, and investigators of legal and financial documents that are hired to look into possible suspicions of fraudulent activity within a company; or are hired by a company who may just want t ...

) 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, a concurrent estate or co-tenancy is any of various ways in which property is owned by more than one person at a time. If more than one person owns the same property, they are commonly referred to as co-owners. Legal terminolo ...

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 contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...

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 ''Boardman v Phipps'' 966UKHL 2is a landmark English trusts law case concerning the duty of loyalty and the duty to avoid conflicts of interest. Facts Tom Boardman, Baron Boardman, Mr Tom Boardman was the solicitor of a family trust.See the cas ...

'').

See also

References

Further reading