What Are the Requirements for Contract Reformation?
- Valid contract: There must be a valid contract in existence. The contract must meet all the requirements of a valid contract under contract laws. If the contract is void due to illegality or other reasons, reformation may not be available
- Valid grounds for reformation: There must be a valid reason to rewrite the contract. Generally there are two grounds which reformation may be based on:
- Mistake- If the parties were mistaken as to the contract terms, a court may grant reformation. Mutual mistakes will always be grounds for reformation. However, unilateral mistakes lead to reformation only if one party was unaware of the mistake
- Misrepresentation- Contract reformation will be granted if one party made a misrepresentation in the contract through fraud or deceit. Reformation will be granted whether the misrepresentation was made innocently or intentionally
- No defenses available: A court will only grant contract reformation if there are no defenses available. Some common equitable defenses include unclean hands and laches
Finally, contract reformation is not available if rewriting the contract will lead to harmful consequences for either party in the future. For example, a court will not rewrite a contract in a way that might prevent qualified purchasers from making a bid on real property.
Do I Need a Lawyer for Contract Reformations?
Contract reformation is a very powerful remedy used by courts. In essence, it allows the court to override the previous agreement and create a new one. While the entire contract is usually not rewritten, changing contract terms can have dramatic effects on the contract agreement. For this reason, it is highly recommended that you consult with a business lawyer if you believe that contract reformation is necessary. Also, it generally best if a lawyer drafts your contract in the beginning, in order to minimize the need for contract reformation in the future.