Chancery Reforms Contract to Insert Missing Terms

Miller v. National Land Partners, LLC, C.A. No. 7977-VCG (Del. Ch. June. 11, 2014).

The Delaware Court of Chancery explains in this 42-page opinion why it granted reformation of a contract in order to insert terms that the Court found the parties intended to include in their written document, but which they inadvertently left out. The controlling legal standard was described in the opinion as follows:

This Court may reform a contract when a ‘written instrument fails to express the [parties'] real agreement or transaction.’ To achieve reformation, the movant must demonstrate either mutual mistake of the contracting parties, or a unilateral mistake by one contracting party and knowing silence by the other. In cases of mutual mistake, the movant must demonstrate, by clear and convincing evidence, that ‘the parties’ actual (oral) agreement was not accurately reflected in their executed written contract.’ To satisfy this burden, the movant ‘must persuade the Court of the precise, orally-agreed-to terms that it seeks to have judicially inserted into the contract.’ (footnotes 109-112 omitted).

This case exemplifies why the outcome of cases like these are not predictable even when the law is clear, because how the law is applied will depend on which witness(es) the court finds credible–or not, and which facts the court will find to be determinative.