Contract reformation is a specific type of remedy for cases involving contract disputes. Reformation means that the court allows the parties to rewrite a portion of the contract so that it reflects the parties’ original intentions more closely.
Contract reformation is a type of equitable remedy, meaning that the parties are required to take some sort of action in order to correct the discrepancy. This is in contrast with legal remedies (i.e., a monetary damages award to reimburse for losses). In a breach of contract case, the non-breaching party usually must elect between legal and equitable remedies.
Contract reformation is available in cases involving:
- Mistake (usually only for mutual mistakes or unilateral mistakes where the non-mistaken party wasn’t aware of the mistake)
- Use of misrepresentation
For misrepresentation cases, reformation can be a remedy for both intentional conduct as well as unintentional misrepresentation.
Contract reformation won’t be granted if it will cause economic harm to any of the parties in the future. For instance, the court won’t let the parties rewrite a contract in a way that limits the legal rights of either party. Also, courts will not allow reformation if it will lead to a contract that is illegal or one-sided.
Another type of remedy related to reformation is rescission (a complete cancellation of the contract). Rescission may be granted where there is a unilateral mistake, but the non-mistaken party knows about the mistake.
As mentioned, parties can sometimes elect to receive damages. However, this depends on various factors, including the type of violation and the overall facts of the case. Usually, if a party elects to sue for damages, they can’t seek rescission later on afterwards.
Contract remedies can often be more complex and difficult to understand when compared to other areas of law. You may wish to hire a contract lawyer if you need help resolving a contract dispute. Your lawyer can provide you with legal advice for your claim, and can represent you if you need to attend court hearings.