Definition of Reformation of Instruments
Reformation of an instrument is a remedy allowed by law where a written instrument already executed is reformed or construed to express or conform to the real intention of the parties. It is a remedy in equity.
Reason for Reformation
Equity orders the reformation of an instrument to express the true intention of the contracting parties. The doctrine's rationale is that it would be unjust and inequitable to enforce a written instrument that does not reflect the real meeting of the minds due to mistake, fraud, inequitable conduct, or accident. The rigor of the legal rule that a written instrument is the final criterion is tempered to forestall the effects of mistake, fraud, inequitable conduct, or accident. When there has been a meeting of the minds, but the instrument fails to express their true intention due to these factors, one of the parties may ask for reformation.
When Reformation May Be Asked
Reformation may be asked when there has been a meeting of the minds of the parties to a contract, but their true intention is not expressed in the instrument due to:
- Mistake.
- Fraud.
- Inequitable conduct.
- Accident.
Specifically, instances where reformation may be proper include:
- Mutual mistake causing the failure of the instrument to disclose the real agreement.
- Unilateral mistake, and the other party acted fraudulently or inequitably such that the instrument does not show their true intention.
- One party was mistaken and the other knew or believed that the instrument did not state their real agreement but concealed that fact.
- Through ignorance, lack of skill, negligence or bad faith on the part of the person drafting the instrument or of the clerk or typist, the instrument does not express the true intention of the parties.
- Two parties agree upon a mortgage or pledge of real or personal property, but the instrument states that the property is sold absolutely or with a right of repurchase.
When Reformation is Not Allowed
There shall be no reformation in the following cases:
- Simple donations inter vivos wherein no condition is imposed.
- Wills.
- When the real agreement is void. Reformation is not a procedure where the real agreement is void, as this would be useless.
Distinction from Annulment
Reformation is distinct from annulment. Reformation is the remedy when there is a meeting of the minds, but mistake, fraud, inequitable conduct or accident prevents the instrument from expressing the true intention. The proper remedy in such a case is reformation. Annulment, on the other hand, is the remedy when there is no meeting of the minds because the consent is vitiated by mistake, violence, intimidation, undue influence, or fraud. Reformation does not invalidate a contract; it validates it. Annulment invalidates a contract. Annulment declares the inefficacy of a contract, while reformation merely produces that inefficacy which did not exist essentially in the contract.
Distinction from Interpretation
Reformation is also distinct from interpretation of contracts. Interpretation is the act of making intelligible what was before not understood, ambiguous, or not obvious. It is a method by which the meaning of language is ascertained. Interpretation determines the meaning of a written or spoken agreement. Reformation, conversely, is a remedy by which a written instrument is made to express or conform to the real intention of the parties. In granting reformation, courts do not attempt to make another contract for the parties, but establish and perpetuate the real contract which was intended.