Reformation

Definition

Reformation refers to the process of amending or revising a contract to correct errors, clarify ambiguities, or adjust the terms to better reflect the original intent of the parties involved. It is a legal remedy used to rectify mistakes or misunderstandings that have occurred during the formation or execution of a contract.

5 Must Know Facts For Your Next Test

1. Reformation is typically used to correct mistakes in the written expression of a contract, such as errors in names, dates, quantities, or other key details.
2. The court may reform a contract if there is clear and convincing evidence of a mutual mistake between the parties or a unilateral mistake by one party that was known and taken advantage of by the other party.
3. Reformation is distinguished from rescission in that it does not cancel the contract entirely, but rather revises the terms to align with the original intent of the parties.
4. Reformation is a discretionary remedy, meaning the court has the power to decide whether it is appropriate based on the specific circumstances of the case.
5. The party seeking reformation bears the burden of proving the need for the remedy by a preponderance of the evidence.

Review Questions

• Explain the purpose and key features of the legal remedy of reformation in the context of breach of contract and remedies.
  • The purpose of reformation is to correct mistakes or errors in the written expression of a contract in order to align the terms with the original intent of the parties. It is a discretionary remedy that allows the court to revise the contract, rather than cancel it entirely like rescission. Reformation is distinct from modification, which requires the mutual consent of the parties to alter the contract terms. To obtain reformation, the party seeking the remedy must provide clear and convincing evidence of a mutual mistake or a unilateral mistake that was known and taken advantage of by the other party.
• Describe how the remedy of reformation differs from other contract remedies, such as rescission and restitution, in the context of breach of contract.
  • Unlike rescission, which cancels the contract and restores the parties to their original positions, reformation amends the contract terms without terminating the agreement. Reformation is also distinct from restitution, which focuses on returning any benefits or payments received under the contract, rather than revising the contract itself. While rescission and restitution may be appropriate remedies for certain breaches of contract, reformation specifically addresses situations where the written contract does not accurately reflect the original intent of the parties, allowing the court to correct these mistakes without completely invalidating the agreement.
• Analyze the role of the court in determining the appropriateness of the reformation remedy in the context of breach of contract and remedies.
  • The court plays a crucial role in deciding whether reformation is the appropriate remedy for a breach of contract. As a discretionary remedy, the court has the authority to evaluate the specific circumstances of the case and determine if there is sufficient evidence to justify revising the contract terms. The party seeking reformation bears the burden of proving the need for this remedy by a preponderance of the evidence, demonstrating a mutual mistake or a unilateral mistake that was known and exploited by the other party. The court's decision to grant reformation is based on its assessment of the parties' original intent and whether the written contract accurately reflects this intent. By exercising its discretion, the court can ensure that the remedy of reformation is applied judiciously to address contractual errors and preserve the integrity of the agreement.

Related terms

Rescission:

The act of cancelling a contract and restoring the parties to their original positions before the contract was formed.

Restitution:

The act of restoring a party to their original position by requiring the other party to return any benefits or payments received under the contract.

Modification: The act of altering the terms of an existing contract with the mutual consent of the parties.