(13) Reformation

What is the purpose of reformation?

To reform a written contract so it conforms to the parties' actual intent.

Is reformation a legal or equitable remedy?

An equitable remedy only.

What is the primary goal of reformation?

To correct the written agreement so it accurately reflects the parties' true agreement.

What is the effect of reformation?

To save the contract by correcting the writing rather than canceling it.

Will a court create a new agreement through reformation?

No.

Will a court use reformation to add terms the parties never mutually agreed upon?

No.

What is the most common ground for reformation?

The written contract does not conform to the parties' prior agreement because of mistake or fraud.

When does fraud justify reformation?

When the victim understands the agreement and exchange but is deceived into believing the writing accurately reflects that agreement.

How does fraud supporting reformation differ from fraud supporting rescission?

In reformation, the parties agreed on the deal but the writing is inaccurate; in rescission, the fraud undermines the validity of the agreement itself.

When is reformation available because of mutual mistake?

When both parties believed the written instrument accurately reflected their agreement, but it did not.

When may reformation be granted for a unilateral mistake?

When one party knows or has reason to know that the writing does not conform to the agreement and the other party does not know.

What is a scrivener's error?

A drafting mistake made by the person preparing the written instrument.

When will a scrivener's error justify reformation?

When the writing fails to reflect the parties' prior or contemporaneous agreement.

Why is parol evidence admissible in a reformation action involving a scrivener's error?

To explain and prove the parties' actual agreement.

When is reformation unavailable even if one party wants to add or delete a contract term?

When the proposed change would alter the parties' written agreement rather than correct a drafting mistake.

Can reformation be used to renegotiate an unfavorable contract?

No.

What equitable defense bars reformation because of unreasonable delay?

Laches.

How can a bona fide purchaser defeat reformation?

A bona fide purchaser without notice of the mistake takes free of the claim.

What is the effect of ratification on a claim for reformation?

If the plaintiff ratifies the contract after learning of the mistake, reformation is barred.

How can assumption of the risk of mistake defeat reformation?

A party who knowingly accepted the risk of the mistake cannot later seek reformation.

How does changed position operate as a defense to reformation?

If another party reasonably relied on the written instrument and changed position, reformation may be denied.

Testable Issue: What is the difference between reformation and rescission?

Reformation corrects the written contract to reflect the parties' true agreement, while rescission cancels the contract entirely.

Testable Issue: What is the difference between reformation and specific performance?

Reformation changes the written contract so it matches the parties' agreement, while specific performance enforces the contract as reformed or as written.

Testable Issue: When is parol evidence admissible in a reformation action?

When offered to prove that the written instrument does not accurately reflect the parties' prior or contemporaneous agreement because of fraud or mistake.

Testable Issue: When is reformation available for a unilateral mistake?

When one party knows or has reason to know the writing is incorrect and the other party is unaware.

Essay Rule: How should you analyze a reformation issue?

Determine whether the written instrument accurately reflects the parties' actual agreement, identify whether fraud, mutual mistake, unilateral mistake with knowledge, or a scrivener's error exists, determine whether reformation would merely correct rather than rewrite the agreement, and analyze any equitable defenses.

Master Synthesis: What is the overall purpose of reformation?

To preserve the parties' bargain by correcting the written instrument so it accurately expresses the agreement they actually made, while refusing to create a new contract or add terms that were never mutually agreed upon.