The phrase describes a legal doctrine holding that when parties are equally at fault in an illegal or fraudulent transaction, neither can sue the other to recover for a loss resulting from that transaction. Consider a situation where two individuals conspire to commit securities fraud. If the scheme fails, and one conspirator suffers financial losses as a result, they cannot sue the other conspirator to recover those losses because both are equally culpable in the illegal activity.
The significance of this principle lies in its ability to prevent wrongdoers from profiting from their own misconduct or shifting the blame to another equally culpable party. Its historical basis is rooted in the equitable maxim that one who comes into equity must come with clean hands. It discourages illegal behavior by removing the incentive to engage in such activity, as the potential for redress is eliminated.
