Key Takeaways

  • Rectification of contract is a remedy courts use to correct written agreements that fail to reflect the true intentions of the parties.
  • The court requires clear evidence of a prior agreement that differs from the written contract due to a mistake.
  • Rectification applies in cases of mutual mistake, and sometimes in cases of unilateral mistake with knowledge by the other party.
  • Courts consider pre-contractual documents, conduct, and credible witness testimony to assess intent.
  • Rectification is not available for poor drafting, failure to reach agreement, or regret over a bad bargain.

Rectification in contract law takes place when a court demands a modification in a contract so that the contract states what it should have stated originally. If a written contract does not accurately convey the specific agreement made by the parties, the court can choose to modify that contract. This involves changing the original wording with an updated text to reflect the parties' intended agreement.

What Does Rectification Involve?

Rectification refers to changes made in a written contract. These modifications are made by swapping a part or all the original wording with updated text to show the parties' intended agreement accurately. When a court rectifies a document, it means that the court intends to place the parties where they should have been if the error had not happened in the first place.

In Roman law, a meeting of the minds was known as consensus ad idem. In a situation where one or both parties were incorrect about an aspect of the agreement, a consensus ad idem does not exist. However, that does not always signify that the contract is invalid.

Clarifying the Nature of the Mistake

For rectification to be granted, the mistake must be one of expression rather than intention. This means the parties reached a clear agreement, but their written contract failed to reflect that agreement due to a clerical or drafting error. The courts are not interested in what the parties might have intended had circumstances been different, but rather whether a genuine consensus existed and was misrecorded.

The courts will scrutinize evidence such as emails, term sheets, and meeting notes to determine if a binding agreement predated the written document. This distinction is crucial: rectification does not rewrite deals — it corrects documentation errors where the deal was clearly made but misrepresented in writing.

The Process of Rectification

  • Rectification involves modifying the written version of the parties' agreement.
  • It is not a modification of the actual agreement.
  • To achieve rectification, it is essential to prove the parties were in full agreement with the details of their contract, but then they proceeded to write them up incorrectly by mistake.
  • The court does not modify the text to show what the parties may have agreed on if they had thought about the terms in greater detail or if they would have had more particulars available to them.

Burden of Proof in Rectification Cases

The burden of proof for rectification is high. The party seeking rectification must demonstrate with convincing evidence that:

  • There was a prior concluded agreement with definite terms;
  • The written document fails to reflect this agreement due to a mistake;
  • Both parties intended the agreement to be recorded accurately but were mistaken in how it was expressed.

This standard of "convincing proof" is higher than the usual balance of probabilities. Documentary evidence, such as drafts, communications, and witness testimony, plays a critical role in satisfying this burden.

When Rectification Does Not Apply

  • Rectification does not assist parties who did not incorporate a certain phrase because they had not fully considered the subject of the contract.
  • The court's role, when enacting its power to allow rectification, is not to rewrite contracts or to include extra terms on the behalf of parties who have not given it enough consideration.
  • Similarly, the courts will not get involved to assist a party with a bad deal.
  • If a court allows rectification, the decision has a retroactive impact on the terms of the document.
  • This means the updated contract will be read as though it had been initially written in its modified form. This may affect the parties in unforeseen ways — for example, in relation to backdated tax accountability.

Rectification vs. Interpretation

It is important to distinguish rectification from interpretation. Interpretation involves construing ambiguous contractual language in light of surrounding circumstances. Rectification, however, is used only when the contract fails to record what was actually agreed due to a mistake in recording the terms.

Courts will not grant rectification where the language used is simply vague or open to multiple meanings — such cases fall under interpretation. Nor will rectification be available when parties simply failed to reach agreement on key terms or later regret the terms they signed.

Basis for Rectification

Rectification typically only takes place when there is no other option. Courts will only allow it in a restricted range of situations. Before assessing whether a rectification is appropriate, the court will make sure the parties have thought about other possibilities. Hence, it is essential to consider all other possible solutions the court may use. Rectification may be allowed in the case of:

  • A mutual error (when both parties make a mistake).
  • A unilateral error (a mistake one party makes).

Null Contracts

In a situation where both parties are incorrect on an essential aspect of the contract, then that contract is null from the beginning. This is the case if the error is so serious that it is an untrue and critical presumption.

For instance, if the name of one of the parties is a critical element of the agreement, a related error will nullify the contract. This could be the case in a contract involving an athlete or a musician. Another critical mistake would involve an item that unbeknownst to the parties, no longer exists.

Unilateral Mistakes

  • In some situations, only one party will make the mistake.
  • In a case where the other party knows about the misunderstanding or should have known, the agreement might not hold up in court.
  • This is true even if the knowledgeable party did not cause the error, and it is known as a unilateral mistake.
  • However, if the details of the contract were apparent to both parties, but an error was made while writing that contract and was not noticed before signing, then rectification may be granted.
  • Nevertheless, it is far less costly for the parties to correct the original contract themselves instead of taking it to the courts.

The Role of Conduct and Knowledge

In unilateral mistake cases, rectification may be granted if one party made an error and the other party knew — or ought reasonably to have known — about the mistake. Courts assess not only what was communicated but how each party acted throughout negotiations. Silence or failure to correct a known misunderstanding can support a claim for rectification.

The party alleging knowledge must prove the other party was aware that the written contract did not reflect the actual terms understood by both sides. Courts are cautious here, as rectification in unilateral mistake claims effectively modifies a contract based on one party’s misapprehension, tempered by the other's conduct.

Frequently Asked Questions

  1. What is rectification of contract?
    Rectification of contract is a legal remedy where a court alters a written agreement to reflect what the parties actually agreed upon when a mistake was made in drafting.
  2. When can rectification be used?
    Rectification is used when both parties shared a common intention that was incorrectly expressed in the written contract, or in some cases where one party made a mistake and the other knew or should have known about it.
  3. What kind of evidence supports a rectification claim?
    Courts look for clear, convincing evidence such as drafts, communications, and conduct showing the parties had a definite agreement that was not properly recorded.
  4. Is rectification the same as contract interpretation?
    No. Interpretation clarifies ambiguous language, while rectification corrects mistakes where the contract does not reflect the actual agreement due to a drafting error.
  5. Can rectification fix a bad bargain?
    No. Courts will not rectify a contract just because one party thinks the deal turned out to be unfavorable. There must be a mistake in recording a mutual agreement.

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