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5. In which of the following is the remedy of reformation most appropriate?
A seller and a buyer, standing on Greenacre, orally agreed to its sale and purchase for $5,000 and orally marked its bounds as «that line of trees down there, the ditch that intersects them, the fence on the other side, and that street on the fourth side.»
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Reformation is NOT a remedy for an underlying disagreement about the deal itself that results in a document reflecting only the understanding of one party. In that scenario, the court will often find that no contract exists at all due to the mutual mistake preventing assent.
The parol evidence rule does not bar the introduction of evidence to show the mistake that forms the basis for reformation.
A is correct. Reformation is a proper remedy ONLY when the writing incorrectly summarizes the parties' shared understanding, not when they fundamentally disagree on terms of the deal to begin with. Where a clerical error has been made in reducing an agreement to writing, a party may bring an action for reformation. This will allow the writing to be corrected or include an omitted provision. Because the seller and the buyer verbally agreed that the boundary of Greenacre was the fence, the writing may be reformed if it mistakenly includes a reference to the two acres beyond the fence.
B is incorrect. In this scenario, the parties disagree about what was included in the boundary of the land (i.e., two acres beyond the fence). Reformation is not available here because this is a fundamental disagreement about the original terms.
C is incorrect. Similarly, reformation is only available when the parties were clear on their original agreement, which was incorrectly reduced to writing. That is not the case where the buyer and the seller had different beliefs about the price.
D is incorrect. As explained above, a misunderstanding of terms before an agreement is formed (i.e., whether the shed would be torn down as part of the original agreement) cannot be reformed.