Rectification Notes

Rectification

• Mackenzie v Coulson (Eq)

  • The plaintiffs sought to have rectified a contract for insurance, issued by the defendants.

  • Held that, the Courts of Equity have no jurisdiction to rectify contracts – they can only rectify instruments which are created pursuant to contracts but contain inaccuracies in relation to them.

  • In this case, there was no contract other than the one which the Plaintiffs signed.

• Shipley UDC v Bradford Corporation (Ch)

  • The plaintiffs were supplying water to the defendants and they sought to have the declaration of their agreement rectified.

  • Held that, the agreement was properly construed as the plaintiffs contended.

  • In the alternative, the Court would, notwithstanding the absence of any prior binding contract, rectify the instrument of agreement so as to give effect to what was proved to be the concurrent intention of the parties at the moment of execution.

• Monaghan County Council v Vaughan (HC)

  • The defendant made a tender for a contract from the plaintiffs, believing that he would be paid a certain sum of money to dispose of debris from a site and would have the use of the material so removed.

  • The tender and the advertisement were ambiguous in their terms, and the plaintiffs believed the offer to be that he would pay them the money for the use of the material to be removed and they sought rectification on the ground of mistake.

  • Held that, what is material in this case is that the parties were agreed on certain matters and the completed contract did not represent the substance of their agreement – the fact that the defendant saw an error in the rendering of the contract and dishonestly sought to take advantage of it is immaterial.

  • An erroneous conception of the intended agreement on the part of one of the parties is enough to prevent their being a mutual agreement.

• Irish Life Assurance v Dublin Land Securities (HC)

  • In a contract between the plaintiffs and F, a property developer, lands were erroneously included which the plaintiff did not wish to sell.

  • The plaintiffs contended that the contracts had been drawn up under a mutual mistake of fact and sought rectification from the court.

  • Held that, there are three principles which must be satisfied before an order for rectification will be granted:

    • there must be a concluded agreement prior to the instrument to be rectified

    • there is a heavy burden of proof, but such agreements need not be binding in law nor need they be in writing

    • a complete concluded contract is not required, so long as there is a prior accord on a term of a proposed agreement, outwardly expressed and communicated between the parties.

  • As a general rule there can be no rectification where the mistake is merely unilateral, which is what occurred in this case, subject to exceptions where there are elements of fraud or sharp practice on the part of the party against whom the order is sought.

  • None of these elements existed in this case and the order will not be granted.

• Ferguson v Merchant Banking (HC)

  • The defendant was in liquidation and the liquidator accidentally included in a contract for sale of certain residential lands, a site with significant development potential.

  • The liquidator later discovered his error and refused to complete the contract.

  • Held that, there was no want of consensus and no mistake as to what was being sold.

  • The courts will not grant an order of rectification where the agreement between the parties fails to establish with a sufficient degree of particularity the common intention of the parties.

• McD v McD (HC)

  • The parties constituted a separated couple and following the reduction of negotiations to a written agreement, the plaintiff claimed that the document should have provided for her costs by the defendant and sought an order for rectification.

  • Held that, in order to rectify a contract, the court must be satisified that there is a common and continuing intention and that as a result of mutual mistake, there is a defect in the recording of, as distinct from the making of, such an agreement.

  • In this case, there would have to be a common intention...

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