Business LawContracts

What happens when there is a mistake in the Contract?

Even when a contract is drafted by an attorney, there can be simple clerical errors that may change the whole contract. If you had an option to purchase, and on one line the wrong date was put for that option to end, it could materially change the terms of the contract.

Fortunately, or unfortunately, depending how you look at it, Wisconsin has a fair amount of case law addressing this problem. In a majority of these cases the error will simply be attributed to “Mutual Mistake”. Basically meaning that neither party noticed it was wrong, but did not intend for it to be present. In a case of Mutual Mistake the remedy is usually to reform the contract to reflect the parties true intentions. The reasoning being that an otherwise mutual oral agreement was erroneously put into writing. If the Court reforms the contract, then the parties true intentions are reflected.

[M]utual mistake, or mistake by one party and fraud by another are recognized as basis for the relief of reformation of an instrument, Findorff v. Findorff (1957), 3 Wis.2d 215, 224, 88 , City of Milwaukee v. Milwaukee Civic Devs., Inc., 71 Wis. 2d 647 (1976)

However, the burden of proof is on the party that is seeking reformation.

“A party seeking reformation must offer clear and convincing evidence that both parties agreed on facts different from those set forth in the agreement.” Hajec v. Novitzke 46 Wis. 2d. 590, 594 (1975)

There is an issue to consider if, for some reason, the error does not fall into the realm of “Mutual Mistake” but instead is construed as an ambiguous provision. In those cases, Court’s have held that any ambiguities are construed against the drafter. However, the intentions of the parties is the ultimate factor to be considered. In Wilke v. First Federal Sav. and Loan Ass’n of Eau Claire 108 Wis.2d 650, 655 the Wisconsin Supreme Court held

Construction of an ambiguous contract clause against the drafter is a general rule to be followed only where consistent with the language of the whole contract and the intent of the parties. The purpose of the rules of contract construction is to aid ascertainment of this intent.

So, while it is best to make sure that what you Contracted for is actually in the contract, if through honest mistake, or fraud from the other side, something in the contract is incorrectly represented, there are remedies to fix the contract based on the parties’ true intentions.

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