Equitable Reformation of Contracts

Business & Corporate, Featured, General

Recently, I encountered the following question - Whether a court may reform a contract in equity and order specific performance where the document is unambiguous as to the particular matter pled to be specifically performed? Reformation of an instrument is an equitable remedy.  The function of reformation is to make a writing express the agreement which the parties themselves have intended.  A court cannot by reformation make a new instrument  or reform an instrument to defeat its object  or give an instrument an effect contrary to the intention of the parties. Generally, the only grounds for reforming an instrument are those of fraud or mutual mistake.  Courts have in some limited instances applied reformation based on any one of the following closely related, if not exactly synonymous grounds: accident , inadvertence , ignorance , misrepresentation , and silence at a time when equity considers there is a duty to speak .

As in other cases involving equitable remedies, the remedy of reformation is available only when there is no plain and adequate remedy at law.   An adequate remedy at law is one that affords relief with reference to the matter in controversy, and is appropriate to the particular circumstances of the case.  The concept of “adequate remedy at law” includes three elements:

(1)    The legal remedy or defense must be as efficient as the indicated equitable relief would be

To bar equitable relief, the remedy at law must be as practicable and as efficient to attain the ends of justice and its prompt administration as the remedy in equity.  A legal remedy is as efficient as equitable relief it is completely enforces or vindicates the legal right – that is, either if it can obtain for or restore to the party the very thing which constitutes the subject of his or her primary right, or if it can give the party money by which the party may repair the injury or secure the specific thing to which his or her right relates.

(2)    It must be presently available in a single action;

To bar equitable relief, an adequate legal remedy must be immediately available in a single action; legal relief is inadequate if it involves a multiplicity of legal actions.

(3)    It must be certain; that, not doubtful or obscure.

To bar equitable relief, the remedy at law must be certain and not doubtful or obscure. The test of certainty has seldom received independent consideration, or been exclusively relied on for equitable jurisdiction. The legal remedy is doubtful or obscure when its precise scope is legally uncertain.

admin @ November 13, 2008