Also known as: reformation
Written by attorneys · grounded in primary & secondary sources — see below
A judicial technique by which a court interprets and enforces a written instrument according to the parties' actual agreement without issuing an equitable decree to alter the document physically.
Apex Components and Ridge Appliances negotiated a supply agreement for 10,000 motor units per quarter. A formatting glitch in the final document reduced the quantity to 1,000 units, and both parties signed without noticing. When Ridge later sued, the court read the quantity term as 10,000 units and enforced the contract on that basis.
Summit Bank and Harbor Fund executed a derivatives confirmation that reversed the intended payment flows due to a copying error from a mirrored draft. Both parties later stipulated they had not intended the reversal. The court construed the confirmation to require the originally agreed payment direction and enforced it accordingly.
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Pine Tower LLC and Apex Corp. signed a lease after agreeing in every draft to annual rent increases. Brokers mistakenly circulated an earlier draft that omitted the escalation clause. The court read the lease to include the escalation term the parties had intended and enforced the adjusted rent obligation.
Alcoa and Essex entered a long-term aluminum supply contract with a pricing formula both believed would track production costs. Unforeseen electricity cost spikes rendered the formula grossly inaccurate. The court construed the price term to provide Alcoa a reasonable profit consistent with the parties' original expectations and enforced the contract on that basis.
Dairy Queen and Wood disputed amounts owed under a trademark and contract arrangement. The court determined that a jury could calculate recovery under breach or infringement theories without equitable intervention. It enforced the parties' intended payment obligations by construing the governing documents accordingly.
Dun & Bradstreet published a credit report containing false statements about Greenmoss Builders. The court construed the report's effect on the parties' commercial relationship and enforced liability standards consistent with the actual content and context of the publication.
Reformation at law allows a court to achieve the same corrective result by simply construing and enforcing the document according to the parties' actual agreement. Traditional equitable reformation requires an in personam order directing physical alteration of the writing. The legal approach avoids equity's personal decree when third-party reliance on the document is not a concern.
Supporting sources
A court grants reformation at law when both parties intended a particular term, the executed writing fails to express that term because of a shared mistake as to its contents, and no innocent third party would be unfairly prejudiced. The court then reads the intended term into the document and enforces the agreement as corrected.
Supporting sources
Ordinary negligence in transcription does not bar reformation at law. The doctrine focuses on whether the writing fails to express the parties' shared agreement due to mutual mistake. Only fault rising to bad faith or violation of reasonable standards of fair dealing prevents relief.
Supporting sources
…a purely legal question having nothing whatever to do either with novation, as the district judge suggested, or reformation, as suggested by the respondents here. Such a defense goes to the question of just what, under the law, the contract between the respondents and petitioner is and, in an action to collect a…