Also known as:reformation in equity · equitable reformations · reformation · contract reformation
Written by attorneys · grounded in primary & secondary sources — see below
A judicial remedy that corrects a written instrument to conform to the parties' actual agreement when a mutual mistake in expression has caused the writing to deviate from that agreement. The remedy is available even if a party was negligent in failing to discover the facts, provided the negligence does not amount to bad faith or a departure from reasonable standards of fair dealing. Courts consider whether reformation or other relief would eliminate any material effect on the agreed exchange before granting avoidance.
Sources & Authorities
How it applies
Common Examples
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Negligent Drafting Error
Eileen Epstein and Edgewater Capital negotiated a supply contract that both intended to contain a price-adjustment clause tied to market indices. The final writing omitted the clause because of a transcription error that neither party caught before signing. When market prices shifted dramatically, Edgewater sought reformation. The court reformed the writing to include the clause because the parties' shared mistake in expression justified the remedy and ordinary negligence did not bar relief.
Parol Evidence Supports Reform
Elijah Edwards and Evergreen Bank signed a loan agreement that both believed contained a floating interest rate. Prior negotiations and internal memos confirmed the floating-rate term, yet the final document fixed the rate. Edwards offered the memos to prove the mutual mistake. The court admitted the evidence as grounds for granting reformation of the writing.
Select any source to read its text and confirm it supports the definition.
Cases
Restatements
Casebooks
Material Effect Assessment
Emmett Egan and Enigma Technologies agreed to a software license whose price rested on an assumed usage volume. Both relied on a shared but erroneous report that understated actual volume. Egan sought to avoid the contract for mutual mistake. The court first considered whether reformation of the price term could restore balance before deciding whether the mistake materially affected the exchange.
Price Formula Transcription Error
Alcoa and Essex adopted a long-term supply contract whose price formula both believed would track future electricity costs. The formula omitted a major cost component that later caused massive underpricing. Alcoa sought reformation of the price term. The court reformed the formula to restore the parties' original expectations rather than rescinding the entire agreement.
Mortgage Assumption Drafting Error
A buyer and seller executed a land contract stating the buyer would assume an existing mortgage. Both parties had agreed only that the buyer would take the land subject to the mortgage. The buyer sought reformation. The court reformed the writing to reflect the actual antecedent agreement rather than enforcing the erroneous term.
Earnings Warranty Transcription Error
A buyer and seller of a chiropractic practice intended that an earnings warranty would track a seven-month financial report. The written agreement mistakenly referenced a six-month period due to a scrivener's error both overlooked. The seller sought reformation. The court reformed the warranty period to match the parties' mutual understanding.
Common questions
Frequently Asked
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Does a party's negligence in failing to discover a drafting error bar reformation?+
Ordinary negligence does not bar reformation. Fault in failing to know or discover facts bars relief only when the conduct amounts to bad faith or a failure to act in accordance with reasonable standards of fair dealing.
Supporting sources
How does a court decide whether a mutual mistake has a material effect on the exchange?+
The court accounts for any relief by way of reformation, restitution, or other adjustment. If such relief can restore balance, the mistake may not be material enough to justify avoidance.
Supporting sources
Can parol evidence be used to support a claim for reformation?+
Evidence of prior or contemporaneous agreements is admissible to show grounds for granting or denying reformation.
Supporting sources
Does the statute of frauds prevent reformation of a writing?+
Reformation is not precluded merely because the contract falls within the statute of frauds.
Supporting sources
494 U.S. 872, 110 S. Ct. 1595, 108 L. Ed. 2d 876 (1990)Constitutional Law
…religious groups of their colporteurs can take from them a part of the vital power of the press which has survived from the Reformation.” 319 U. S., at 112. Yoder said that “the Court’s holding in Pierce stands as a charter of the rights of parents to direct the religious upbringing of their children. And, when the…