Understanding How Contracts can be Equitably Reformed Under Florida Law
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Contract reformation is an equitable remedy that acts to correct an error not in the parties’ agreement but in the writing that constitutes the embodiment of that agreement. It is designed to correct a defective or erroneous instrument so that it reflects the true terms of the agreement that the parties actually reached and, at its essence, allows a judge to reform a written document to match the parties’ understanding. The doctrine has evolved such that if a document is to be reformed, it should reflect the true intention of the parties. Florida courts employ this equitable measure in order to preserve the sanctity of the contracting parties’ negotiations and the spirit of the deal.
When Is Contract Reformation Appropriate?
Under Florida law, reformation of a written contract is appropriate when the contract fails to express the parties’ true agreement because of mutual mistake or when one party acts inequitably or fraudulently and causes the counterparty to make a unilateral mistake. See Smith v. Royal Automotive Group, Inc., 675 So. 2d 144, 150 (Fla. 5th DCA 1996); Belitz v. Riebe, 495 So. 2d 775, 776 (Fla. 5th DCA 1986) (explaining that “a court will reform a contract if it fails to express the parties’ intentions because of fraud, mutual mistake, accident or inequitable conduct”); Avers v. Thompson, 536 So. 2d 1151, 1154 (Fla. 1st DCA 1988) (noting that “reformation is proper for unilateral mistake on one side of the transaction, and inequitable conduct on the other”); Providence Square Assoc. v. Biancardi, 507 So.2d 1366, 1369 (Fla. 1987) (clarifying that a court “has the power to reform a written instrument where, due to a mutual mistake, the instrument drawn does not accurately express the true intention or agreement of the parties to the instrument”); Tri-County Produce Distr. Inc. v. Northeast Prod. Cr. Ass’n, 160 So.2d 46, 50 (Fla. 1st DCA 1963) (same).
In Providence Square Association, Inc. v. Biancardi, 507 So.2d 1366 (Fla. 1987), the Supreme Court of Florida, after an exhaustive search into the law of contract reformation, and affirming equitable powers to reform, explained why the law made for good Florida state policy:
Notably, in reforming a written instrument, an equity court in no way alters the agreement of the parties. Instead, the reformation only corrects the defective written instrument so that it accurately reflects the true terms of the agreement actually reached.
What Can Be Utilized To Support Contract Reformation?
A reformation relates back to the time the instrument was originally executed and simply corrects the document’s language to read as it should have read all along. Providence Square, 507 So.2d at 1369-1371. Providence Square also instructed that parol evidence, such as oral statements that were made leading up to a writing, may be utilized to support the reformation:
Indeed, the general rule in actions at law based on contracts and other written instruments is that ordinarily the writing itself must stand as the only exposition of the parties’ intent. In a reformation action in equity, however, parol evidence is admissible for the purpose of demonstrating that the true intent of the parties was something other than that expressed in the written instrument. Spear v. McDonald, 67 So.2d 630 (Fla.1953); Biggs v. Biggs, 452 So.2d 129 (Fla. 2d DCA 1984); Rowland v. Whitehead, 375 So.2d 607 (Fla. 2d DCA 1979).
Providence Square, 507 So.2d at 1371.
In reforming an instrument, Florida courts have no power to make a new contract. Rather, the rationale for reformation of an instrument is that the court sitting in equity does not alter the parties’ agreement but allows a defective instrument to be corrected to reflect the true terms of the agreement that the parties actually reached. Circle Mortg. Corp. v. Kline, 645 So.2d 75 (Fla. 4th DCA 1994). Thus, equity decrees the reformation of a writing only when it is established that an agreement exists to which the writing may be made to conform and may not be used to supply an agreement that was never made or to supply material terms or provisions omitted by the parties. Therefore, when courts reform a contract, they must demonstrate that as a matter of equity it was the intent of each party to incorporate the changes. Davis v. Hinson, 67 So. 3d 1107 (Fla. 1st DCA 2011). Equitable reformation is essentially a fairness principle—parties to an agreement should be bound to the terms they agreed upon.