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Contract Reformation: Correcting Errors in the Contract

 

The many readers of this weekly blog out of Hugo MN have become familiar with my emphasis on putting agreements in writing.  Related to that sequence though is the possibility that the written contract contains an error.  Are the parties stuck with that error?  In short, No.

  

Take this example:  Buyer thinks the land at issue is in Hugo.  Seller thinks the same.  In fact, though, the land is in Centerville.  Furthering the problem, there is land in Centerville with the exact same address as what is in the writing between Buyer and Seller.  Here, the contract isn't void and the Buyer (for other reasons too) is not stuck paying Seller for the wrong land.  The contract can be reformed to reflect the parties' actual agreement.

  

Contract reformation “is an equitable remedy that is available when a party seeks to alter or amend language in a contract so that the contract reflects the parties’ true intent when they entered into the contract.” SCI Minn. Funeral Servs., Inc. v. Washburn-McReavy Funeral Corp., 795 N.W.2d 855, 864 (Minn. 2011).  The party seeking reformation must prove;

 

(1) there was a valid agreement between the parties expressing their real intentions;

(2) the written instrument failed to express the real intentions of the parties; and

(3) this failure was due to a mutual mistake of the parties, or a unilateral mistake accompanied by fraud or inequitable conduct by the other party.

 

All is not lost if there is a writing with an error.  If common sense and past exchanges between the parties isn't enough to cause a mutually agreeable correction, there is a precedent for reformation of the contract.  

 

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney. All information contained in links are the property of the linked site.


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