What Is Contract Reformation?

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What Is Contract Reformation?

In cases involving mistake of fact or misrepresentation, the judge may choose to issue contract reformation as a remedy. Contract reformation allows the parties to rewrite the portion of the contract that’s causing the misunderstanding so that the language of the contract reflects their preferences more clearly.

The contract must be valid to begin with in order for reformation to be allowed. For example, reformation is not available for contracts involving an illegal subject matter.

Is Contract Reformation the Same as Contract Rescission?

Contract rescission is another type of contract remedy. With rescission, the entire contract is cancelled. Later, the parties may draft another contract if they choose to do so. This is different from reformation, which keeps the original contract, but allows the parties to change a portion of it. With reformation, the parties are still bound to perform their contract duties.

On the other hand, rescission releases the parties from any contractual obligations that they may have had, since the contract is void and no longer valid. Also, rescission is applied in different situations than reformation. Rescission tends to apply when there are issues with the overall formation of the contract as a whole (such as a lack of capacity to form a contract, or issues with duress or contract fraud).

How Can I Avoid Mistakes in a Contract?

Reformation usually only becomes necessary if there is a mistake in the contract or if one of the parties is mistaken about a contract issue. This can be avoided mostly by ensuring that the contract doesn’t have any ambiguous, vague, or difficult-to-understand terms.

The parties should ensure that they’re "on the same page" when it comes to each and every term used in the contract. They should come together before signing to review any terms that might cause issues. The assistance of a lawyer can be of great help during the negotiation and reviewing stages of contract formation.

Do I Need a Lawyer for Help with Contract Reformation?

Reforming a contract requires careful insight into the contract, as well as a broad understanding of contract laws. You may wish to hire a lawyer for help when it comes to contract issues. Your lawyer can provide you with advice and guidance and can help you obtain remedies such as reformation.

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Last Modified: 11-18-2013 04:36 PM PST

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