Rectification of Mistake Flashcards
Define rectification of mistake?
o Rectification of mistake — an equitable remedy that deals with transcription errors
§ Occurs when the parties sign a contract, and then they realize that the contract does not accord with the oral agreement that they previously made.
§ The contract is still made to stand, not void or rescinded, but the parties want the contract to be rectified by the court.
§ In other words, mistakes in the process of reducing their agreements to writing.
§ Like all equitable remedies, it is discretionary. The court may or may not grant it to you
§ The claim for rectification is that you are asking the court to rectify the written instrument to accord with the previous oral agreement.
What is rectification of mistake an exception to?
o Rectification is an exception to the parole evidence rule
§ Recall: with the parole evidence rule, oral statements prior to a contemporaneous written agreement are not admissible if they contradict the written agreement. This is an exception to that because if there couldn’t be an exception then rectification would not be possible if the parole evidence rule applied.
§ Claims for rectification of mistake want the oral statements that contradict with the written contract to be admitted into the contract
Sylvan Lake Golf and Tennis Club Ltd., v Performance Industries Ltd, 2002
Conditions precedent to rectification
- High hurdles are placed in the away of a businessperson who relies on their unilateral mistake to resile from the written terms of a document which he or she has signed and which, on its face, seems perfectly clear – law doesn’t want to open the proverbial floodgates to dissatisfied contract makers who want to extricate themselves from a poor bargain
- Four conditions precedent that the plaintiff must overcome (prove):
1) The existence and content of the inconsistent prior oral agreement.
- Must prove that there was a prior oral agreement between the two parties.
- Rectification is the most venerable breach in the parole evidence rule
2) Fraud or Conduct Equivalent to Fraud – not only show that the written document does not correspond with the prior oral agreement, but that the other party knew or ought to have known of the mistake in reducing the oral terms to writing.
- Mere unilateral mistake alone is not sufficient to support rectification
- It is only where permitting the other party to take advantage of the error would amount to fraud/equivalent of fraud that rectification is available
- Fraud refers not to the tort of deceit or strict fraud in the legal sense, but rather to the broader category of equitable fraud or constructive fraud: fraud in this wider sense refers to transactions falling short of deceit but where the Court is of the opinion that it is unconscientious for a person to avail himself to the advantage obtained.
- This requirement closes the floodgate to unhappy contract makers who simply made a mistake
- Equity acts on the conscience of a defendant who seeks to take advantage of an error which they knew or ought reasonably to have known at the time the document was signed
3) Precise Terms of Rectification – The precise form in which the written instrument can be made to express the prior intention.
- Must be able to specify precise words from the original oral agreement, not a generalization or feelings.
- This requirement closes the floodgates to those who would invite the court to speculate about the parties’ unexpressed intentions or impose what in hindsight seems to be a sensible arrangement that the parties might have made but did not
- The court’s equitable jurisdiction is strictly limited to putting into words what the parties had already agreed orally. They can’t just add made up words that the parties never discussed.
4) Existence of “Convincing Proof” All of the foregoing must be established by proof beyond a reasonable doubt
Defined as convincing proof, Ex proof that may fall well short of the criminal standard of BARD, but which goes beyond the sort of proof that only reluctantly and with hesitation scrapes over the low end of the civil “more probable than not” standard.
Canada Attorney General v Fairmont Hotels Inc., 2016
Fairmont case alters rectification test with 1 modification
o “Convincing proof” is unclear and no longer binding, we now used on a balance of probabilities.
o Rectification is not equity’s version of a mulligan (a do-over). If parties make a deal with particular tax consequences then they can’t just have the court fix problems with their poorly formed contract. Rectification is supposed to be meant for a written agreement to better reflect an oral agreement.
