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Remedies âą Contract - Equitable Remedies
REM#071
Legal Definition
Reformation is the process of changing a written agreement to conform to the parties' original understanding. There must be (1) a valid contract, (2) sufficient grounds, and (3) no defenses.
Plain English Explanation
Mistakes happen. Sometimes people want to engage in a contract, and create a contract, but completely mess up some important part of the contract. Rather than forcing them to start over, courts are willing to modify the existing contract to ensure it matches the intent of the parties.
In other words, reformation is like fixing a written deal to match what both people originally wanted.
For a court to fix it, three things need to be true: First, the original deal has to be a valid contractâsomething both of you agreed to. Second, there needs to be a good reason to believe that whatâs written doesnât match what you both meant, like a typo or misunderstanding. Third, there shouldnât be any legal reasons (defenses) that would stop the court from making the change.
In other words, reformation is like fixing a written deal to match what both people originally wanted.
For a court to fix it, three things need to be true: First, the original deal has to be a valid contractâsomething both of you agreed to. Second, there needs to be a good reason to believe that whatâs written doesnât match what you both meant, like a typo or misunderstanding. Third, there shouldnât be any legal reasons (defenses) that would stop the court from making the change.
Hypothetical
Hypo 1: Bob agrees to sell Sam 100 acres of land, but the written contract mistakenly says 10 acres. Both Bob and Sam originally agreed on 100 acres, but the typo went unnoticed. Sam later realizes the mistake and asks the court to correct the contract. Result: The court would likely grant reformation because there is a valid contract, a clear mistake (the typo), and no defenses preventing the correction. The contract would be reformed to reflect the original agreement of 100 acres.
Hypo 2: Sam agrees to buy Bobâs car for $5,000, but the written agreement mistakenly lists the price as $500. Both parties originally agreed to $5,000, but an error occurred when writing the contract. When Bob notices the mistake, he asks the court to change the contract to the correct price. Result: The court would likely grant reformation to correct the price to $5,000 because there is a valid contract, a clear reason for the change (the mistake), and no defenses against making the correction.
Hypo 3: Bob agrees to sell Sam a piece of antique furniture, and they both agree on $2,000. However, the written contract mistakenly describes the item as a replica rather than an original antique. Sam later realizes the mistake and asks the court to correct the description. Result: The court would likely grant reformation to correct the description to reflect the original agreement that it is an original antique, as there is a valid contract, sufficient grounds (the mistake), and no defenses against reformation.
Hypo 4: Sam and Bob agree to enter into a business partnership, and the written contract outlines their responsibilities. However, the contract mistakenly assigns Sam responsibilities that were originally meant for Bob. Sam asks the court to correct the contract to reflect their original understanding. Result: The court would likely grant reformation because the original understanding was clear, the mistake was documented, and there are no defenses that would prevent correcting the contract to match the original agreement.
Hypo 5: Bob sells Sam a car, and the contract correctly states the price and terms. Later, Sam regrets the purchase and claims that they both originally agreed to a different price. Sam asks the court to change the contract. Result: The court would likely deny reformation because there is no clear evidence of a mistake or misunderstanding in the original written agreement. Reformation is not used to alter a contract simply because one party changes their mind after the fact.
Hypo 2: Sam agrees to buy Bobâs car for $5,000, but the written agreement mistakenly lists the price as $500. Both parties originally agreed to $5,000, but an error occurred when writing the contract. When Bob notices the mistake, he asks the court to change the contract to the correct price. Result: The court would likely grant reformation to correct the price to $5,000 because there is a valid contract, a clear reason for the change (the mistake), and no defenses against making the correction.
Hypo 3: Bob agrees to sell Sam a piece of antique furniture, and they both agree on $2,000. However, the written contract mistakenly describes the item as a replica rather than an original antique. Sam later realizes the mistake and asks the court to correct the description. Result: The court would likely grant reformation to correct the description to reflect the original agreement that it is an original antique, as there is a valid contract, sufficient grounds (the mistake), and no defenses against reformation.
Hypo 4: Sam and Bob agree to enter into a business partnership, and the written contract outlines their responsibilities. However, the contract mistakenly assigns Sam responsibilities that were originally meant for Bob. Sam asks the court to correct the contract to reflect their original understanding. Result: The court would likely grant reformation because the original understanding was clear, the mistake was documented, and there are no defenses that would prevent correcting the contract to match the original agreement.
Hypo 5: Bob sells Sam a car, and the contract correctly states the price and terms. Later, Sam regrets the purchase and claims that they both originally agreed to a different price. Sam asks the court to change the contract. Result: The court would likely deny reformation because there is no clear evidence of a mistake or misunderstanding in the original written agreement. Reformation is not used to alter a contract simply because one party changes their mind after the fact.
Visual Aids
Related Concepts
How does election of remedies affect a claim for rescission?
If a contract has a liquidated damages clause, is specific performance still an option?
What are common defenses to specific performance?
What are defenses to rescission?
What are equitable remedies in contract?
What are the defenses to formation?
What happens if a plaintiff is entitled to rescission but has already performed?
What is rescission?
What is specific performance and when it is applicable?
What is the part performance exception to the Statute of Frauds?
What type of mutual mistake is sufficient for rescission?
When applying specific performance to a land purchase contract, what happens if a buyer breaches a "time is of the essence" clause with a forfeiture clause?
When applying specific performance to a land purchase contract, what happens if the quantity of land is in dispute?
When assessing reformation, what constitutes sufficient grounds?
When assessing specific performance, how do courts weigh feasibility of enforcement?
When assessing specific performance to acquire a unique piece of property, when is uniqueness tested?
When assessing specific performance, what must the status be of a plaintiff's contractual conditions?
When assessing specific performance, why are money damages sometimes an inadequate legal remedy?
When assessing whether money damages are inadequate for specific performance, why does it matter whether a piece of property is unique and what kind of property is always unique?
When is personal property considered unique enough to trigger specific performance?
Will courts grant rescission for a unilateral mistake?
