13.8 Reformation

• Library: Contract Law in Virginia (Virginia CLE) (2019 Ed.)

13.8 REFORMATION

13.801 In General. Like rescission, reformation conflicts with the public policy favoring the finality of documents and the enforcement of

[Page 1049]

contractual obligations freely agreed to. Accordingly, reformation is available as a remedy only in three distinct types of cases.

First, reformation is available in the case of a mutual mistake of fact which results in a contract that the parties believe to be accurate but that does not accurately reflect the parties' agreement. ³⁹¹

Second, reformation is available where there is a mistake by one party (a unilateral mistake), but the mistake is accompanied by "misrepresentation and fraud perpetrated by the other." ³⁹²

Third, reformation is available where the parties make an agreement and, in the course of reducing it to writing, make a mistake of law so that the contract does not accurately reflect their true agreement. As explained in Puckett v. Campbell: ³⁹³

If . . . after making an agreement, in the process of reducing it to a written form the instrument, by means of a mistake of law, fails to express the contract which the parties actually entered into, equity (may grant reformation), to the same extent as if the failure of the writing to express the real contract was caused by a mistake of fact. In this instance there is no mistake as to the legal import of the contract actually made; but the mistake of law prevents the real contract from being embodied in the written instrument. In short, if a written instrument fails to express the intention which the parties had in making the contract which it purports to contain, equity will grant its relief, affirmative or defensive, although the failure may have resulted from a mistake as to the legal meaning and operation of the terms or language employed in the writing. ³⁹⁴

[Page 1050]

13.802 Standard of Proof. Virginia law has long recognized that "the function of the court is to construe the contract made by the parties, not to make a contract for them." ³⁹⁵ This is true even in cases where enforcement of the contract as written produces a harsh result, for as the Virginia Supreme Court has stated, "a court is not at liberty to rewrite a contract simply because the contract may appear to reach an unfair result." ³⁹⁶ Accordingly, the party seeking to reform an agreement bearing his signature has a heavy burden:

Equity has undoubted jurisdiction to reform an instrument if it does not express the intent of the parties. Equity should give effect to the true intent of the parties, despite a contrary intent reflected by a writing the parties mistakenly believed to monument their bargain. But equity should not act lightly. A signatory party who asks reformation asks impeachment of an instrument he has approved by his signature. To support reformation on the ground of mutual mistake, the proof "must be clear and satisfactory, leaving but little, if any, doubt of the mistake." ³⁹⁷

13.803 Ambiguity and the Parol Evidence Rule. Numerous decisions lay down the rule that a court may not grant reformation where a contract is clear and unambiguous and that the parol evidence rule prohibits the parties from using evidence of prior or contemporaneous negotiations to alter the terms...