Rectification of contract for mistake

Two recent cases have highlighted when the court will allow rectification of a contract following a mistake.

Common mistake - Surgicraft Ltd v Paradigm Biodevices

Surgicraft had developed a spinal implant, and Paradigm was appointed by Surgicraft as its distributor for the US market. Surgicraft underwent a change of control and it exercised its right in the contract to terminate without paying compensation to Paradigm. The contract contained an entire agreement clause to exclude matters not expressly set out in the contract. The judge, however, found on the facts that there had been a common intention between the parties that a change of control over Surgicraft would not exempt Surgicraft from paying compensation, and that the entire agreement provision in the agreement was the result of a common mistake between the parties.

As set out in Chartbrook v Persimmon [2009]UKHL 38, it will be necessary to show: a common continuing intention whether or not amounting to an agreement; an outward expression of accord; that the common intention continued at the time of execution; and that by mistake the instrument did not reflect this common intention.

In Traditional Structures Ltd v H W Construction, the court allowed rectification for unilateral mistake and a fair price for the work carried out where the last line of a sub-contractor's faxed quotation had been inadvertently cut off, providing a price marked "steelwork" but omitting the price for cladding. The main contractor was held to have failed wilfully and recklessly to enquire whether the price covered both works, which an honest and reasonable man would have done. The sub-contractor successfully argued that a fixed price had been agreed for the steelwork and it was entitled to a fair price for the cladding under s.15 of the Supply of Goods and Services Act 1982, as agreement had been reached in all aspects of the cladding work, save the price, in sufficient detail to conclude a contract.

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