What if I Have Made a Mistake in My Contract?

WHAT IF I'VE MADE A MISTAKE IN MY CONTRACT?

By: Larry R. Leiby, Esq. and Robert S. Tanner, Esq.

About the Author: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at leiby@mkpalaw.com. For more information, please visit www.mkpalaw.com.

A question that comes up fairly regularly is, "If I made a mistake in my contract, do I have the right to fix the mistake?" In legal lingo, "fixing" a mistake in a contract would be to "reform" the contract. Reformation is not a legal right. It is a remedy that courts may allow if the equities justify it. A court may order the reformation of a contract if what is being "fixed" is an error in the document that contains the parties' agreement. Reformation is not available to correct an error in the agreement itself. Additionally, the failure of the document to reflect the parties' intentions must be as a result of a mistake by both of the parties, not just one. A mistake by just one of party is generally insufficient to warrant reformation, unless the other party is guilty of some fraud or other inequitable conduct that led to the mistake.

The case of Jackson v. Investment Corporation of Palm Beach, 585 So. 2d 949 (Fla. 4 th DCA 1991) provides a good example. In that case, Investment Corporation of Palm Beach ("Owner") owned a dog racing track. Owner submitted an advertisement to be published in the Miami Herald. Owner contended that it intended the ad to offer a jackpot of $25,000.00 for picking six designated races. A mistake occurred and the ad that was published stated that the jackpot was $825,000.00. John Jackson ("Jackson") saw the ad, attended the races on the specified date, and picked the winner of six races. Owner paid Jackson $25,000.00. Jackson sued for the additional $800,000.000. At trial, the evidence was clear that Owner never intended to offer $825,000 and that the published ad was a mistake. The trial court gave a jury instruction that essentially directed a verdict in favor of Owner. On appeal, the appellate court found that Owner's advertisement was an offer, that Jackson accepted the offer, and that as a result Owner and Jackson had a contract. As to Owner's mistake, the court applied the well-established rule of law that whether the parties have a contract depends "not on the parties having meant the same thing but on their having said the same thing." Thus, Owner's subjective intent - what he meant the advertisement to say - did not matter.

Although Owner apparently did not argue the theory, a contract may be rescinded (cancelled) upon proving a "unilateral mistake." To succeed, it must be shown by clear and convincing evidence that (1) the mistake was induced by the party who would benefit from the mistake, (2) the party who made the mistake was not negligent and did not fail to exercise due care, (3) it would be inequitable for the court to deny rescission, and (4) the party opposing the rescission did not change its position such that rescission would be unjust. Ghahramani v. Guzman, 768 So. 2d 535 (Fla. 4 th DCA 2000). Put more succinctly, courts are required to enforce contracts that are plain and unambiguous on their face and a "party's performance under a contract is not excused on the basis of unilateral mistake when the mistake is the result of the party's own negligence and lack of foresight or the other party has relied upon his performance so that rescission would be inequitable." Limehouse v. Smith, 797 So. 2d 15 (Fla. 4 th DCA 2001).

So, the answer to the question, "If I made a mistake in my contract, do I have the right to fix the mistake?", usually is, No. A person who makes a mistake in a contract will generally be held to what is stated in the contract, even when the consequences of the unilateral mistake are rather severe. Being painstaking in preparing your contracts is advised.