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reformation

Reformation is a court’s equitable power to modify a contract to reflect the parties’ true intent where some error has been committed. Courts require plaintiffs seeking to reform a contract to prove certain elements, however. The Oregon Supreme Court in Jensen v. Miller summarizes the common law requirements for showing reformation, stating that parties seeking reformation must show: “(1) that there was an antecedent agreement to which the contract can be reformed; (2) that there was a mutual mistake or a unilateral mistake on the part  of the party seeking reformation and inequitable conduct on the part of the other party; and (3) that the party seeking reformation was not guilty of gross negligence .” For example, in Central Oregon Independent Health Services, Inc. v. State , an Oregon Court of Appeals held that a plaintiff stated a claim for reformation by stating that previous contracts required parties to “pay at the correctly calculated rates,” as opposed to the current contract which had been construed “to impose no obligation on [the parties] to correct erroneously calculated rates.”

[Last reviewed in December of 2020 by the Wex Definitions Team
]

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