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Reformation

Definition - What does Reformation mean?

In the context of contract law, reformation is a legal right that a court has over any agreements that are made in their jurisdiction, wherein the court can make a ruling that changes the terms of the contract if one of the two parties in the contract petition the court for a change.

Justipedia explains Reformation

The reason why reformation is allowed is to facilitate equitable interest in a contract that is unequally written and that does not protect both parties' interests equitably.

Reformation is allowed to take place at any point in the contract and, in some cases, after a contract has finished in terms of retrospective payments. Reformation can take place when there is a mistake or any type of misunderstanding, where the terms in the contract are not clearly written.

Some jurisdictions require a secondary document to any contract that shows the terms have been clearly explained to both parties. In such cases, reformation can only take place if there was a mistake in the terms, as there cannot be any issue around misunderstandings when both parties certify that they had read and had separate legal advice in relation to the contract and their obligations within it.

This definition was written in the context of Contract Law

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