What Is Rectification in Contract Law?
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.3 min read
2. The Process of Rectification
3. When Rectification Does Not Apply
4. Basis for Rectification
5. Null Contracts
6. Unilateral Mistakes
Updated November 4, 2020:
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.
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.
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.
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).
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.
- 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.
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