Reformation: Overview, definition, and example
What is reformation?
Reformation is a legal remedy used to correct or modify a written contract, agreement, or document to reflect the true intentions of the parties involved. This remedy is typically used when there is a mistake, misrepresentation, or other error in the written document that does not accurately represent what was agreed upon by the parties. Reformation allows the court or other legal authorities to "rewrite" the document in a way that aligns with the original agreement, thus ensuring that the document is legally valid and reflective of the true intent of the parties. Reformation is often used in cases involving contracts, deeds, and wills.
For example, if a contract includes a typographical error that changes the terms of the agreement, reformation may be sought to correct that error and ensure the contract accurately reflects the parties' original understanding.
Why is reformation important?
Reformation is important because it provides a means of correcting mistakes in legal documents without invalidating the entire agreement. Without reformation, a contract or agreement with an error might be unenforceable or might lead to disputes between the parties. By allowing a document to be corrected to reflect the true intentions of the parties, reformation helps maintain fairness and legal certainty in contracts and agreements. It ensures that all parties are held to the terms they originally agreed upon, even if there was an error in drafting the document.
Understanding reformation through an example
Let’s say two businesses enter into a contract for the sale of goods, but the written agreement mistakenly states the price as $10,000 when both parties intended the price to be $15,000. After the contract is signed, both parties realize the error and agree that the price should be $15,000. The parties may seek reformation of the contract, asking the court to modify the written agreement to reflect the correct price of $15,000. This correction ensures that the contract aligns with the parties' original intent and is enforceable.
In another example, a company and an employee sign an employment agreement, but due to a drafting error, the agreement includes an incorrect job title. The employee and the employer both agree that the title should have been “Senior Manager” instead of “Manager.” The company could seek reformation of the employment contract to correct the title, ensuring that it accurately reflects the position the employee was hired for.
An example of a reformation clause
Here’s how a reformation clause might appear in a contract or agreement:
“In the event of any mistake, misrepresentation, or error in this Agreement, the Parties agree that the Agreement may be reformed by mutual consent or by court order to reflect the true intent of the Parties. Such reformation will ensure that the Agreement is consistent with the original understanding of the Parties, and the Parties agree to cooperate in making such corrections.”
Conclusion
Reformation is a vital legal tool that allows parties to correct errors or misrepresentations in contracts, deeds, or other legal documents. By providing a means to ensure that agreements accurately reflect the true intent of the parties, reformation helps maintain fairness and legal clarity. It allows parties to enforce agreements based on their actual understanding, even when mistakes occur in the drafting process, ensuring that the contractual relationship remains valid and enforceable.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.