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Rectifying a Mistake in the Terms of a Contract

You and a second party came to terms and signed a contract. However, at some point after signing the contract, you found there was a mistake in its terms. Is it possible for a contract to be varied, rectified, or ended if there is a mistake in the terms?

The answer is yes, in certain circumstances, you can get a contracted varied, rectified, or ended due to mistakes. However, the mistake must be with a fundamental term of the contract for the courts to consider it. The courts may decide the contract is to be rectified to the original intentions of the parties involved. In some cases, the court may terminate the contract.

The courts classify mistakes that impact contracts:

– A common mistake is one where both parties are mistaken about the same item in the contract.
– A mutual mistake is one where both parties are mistaken, but about two different sections of the contract.
– A unilateral mistake is one where one party is mistaken, but the other party either already knows about the mistake or should know about it.

If both parties agree to amend the contract to correct a mistake, then there is no need to petition the court. If one party does not agree to the amendment of the contract, the other party can apply to the court for relief of the mistake.

The courts assess each case’s circumstances based on the words used by each party or the conduct each exhibited when negotiating and signing the contract. If the mistake was made when committing the agreement to written form, the courts might order relief. It is usually an order to rectify the contract back to the original intention of the parties involved. However, the court may give the order to end the contract in some cases.

Some mistakes go deeper than others. For example, if the contract unjustly enriches one party at the other’s expense, the mistaken party can petition the court for relief. The courts will base its decision off the evidence presented.

The court’s applied relief will vary by the case’s circumstances. Most commonly the courts will order the amendment of the contract. However, the courts may deem the agreement is too fundamentally flawed to rectify. In those circumstances, the courts may decide to terminate the contract entirely.

In Taylor v Johnson (1983), two parties entered into a contract for the sale of a piece of land. The sale price on the contract was for $15,000. However, the seller thought the actual price was for $15,000 per acre, not $15,000 for the entire property.

The court found that the seller had been mistaken in signing the sales agreement given that the price was wrong. They also found that the purchaser of the property had known about the mistake and said nothing about it to the seller. This was likely an attempt to make a profit. The court ordered the contract to be terminated.

The ideal course of action is to make sure the contract you sign has no mistakes amongst its terms. Use a contract template from RP Emery and fill it out carefully. Then, have the other party review it. Review it for yourself to ensure it captures the terms of the negotiated agreement. Have someone else read it to verify it. Only when you are comfortable, sign the contract.

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