What is reformation?
The definition of reformation, when used in contract law, is one of many legal remedies available for use when a breach of contract or contract problem occurs. During the reformation process, the contract is officially and legally modified or revised in order to match the actual agreement as understood by the parties in the original situation. Use our free legal guide below to learn more.
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UPDATED: Jul 16, 2021
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Reformation, when used in a discussion of contract law, is considered one of the legal remedies available for use when a breach of contract or contract problem occurs. In a situation where two or more parties have entered into a contract and not all of the written contract matches what the parties understood the agreement to be, a court of law may use reformation to settle the dispute. During this process, the contract is officially and legally modified or revised in order to match the actual agreement as understood by the parties in the original situation.
In some cases, reformation is required simply because a mistake was made and some or all of the written contract was misunderstood. In other cases, fraud may have occurred on some level, and in order to clear the deal and clarify the actual agreement, reformation can be used to adjust the wording of the documentation so that the error(s) can be corrected.
As an example, perhaps one party sells property to another, and within the contract, the property value is stated. However, the stated value is incorrect, either because of a simple mistake or because the seller was attempting to mislead the buyer.
In this case, both parties should take the contract to a court of law, and if reformation is used as a solution, it may simply mean that the court corrects the wording of the documentation to reflect the actual value of the property, should both parties be amenable to this solution. If, on the other hand, fraud occurred, or if both parties are not satisfied with the contract under this new wording, further adjustment may be necessary, and in these cases reformation would not be an adequate solution to reach an agreement; there may also be penalties for the seller and/ or compensation for the buyer due to the misleading nature of the mistake.
If you are involved in a contract dispute and/or a proceeding to reform a contract, you should consult with a lawyer to make sure your rights are protected.