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What can be done about mistakes made in contracts?

By Geoff Hardy - 6 Mar 2019

It is very common for clients to find out that their contract doesn't actually say what they intended, or that they have made a mistake in it. The law provides three ways to remedy such problems.

  1. The Contract and Commercial Law Act 2017 (the CCLA) which has provisions which allow you to deal with mistakes once you find them.
  2. Rectification of contract which is another body of law developed over centuries by the English courts and can be used to overcome a mistake made by both parties.
  3. The Disputes Tribunals which are our small claims courts which have their own powers to deal with contracts and vary terms.

First of all, if you want to rely on the CCLA or rectification of contract, you will need to go to court, a costly exercise. Second, if you want to go to the Disputes Tribunal, it can only be for sums of up to $15,000, or $20,000 if you can get the other side to agree to this.

Assuming that you do have a claim worth going to Court for, you have two hurdles if you want to rely on the CCLA. The first hurdle is that the other side is likely to deny there is a mistake in the contract, which could mean a costly battle in court. The second hurdle is that the mistake cannot be about what you thought the contract terms said. This is considered to be a mistake as to interpretation and the CCLA does not cover this type of mistake.

As for rectification, if you can show that you and the other party never intended for a contract to provide for something, then you can apply to the courts to overcome this mistake. However, this ignores the likely scenario where the other side denies there is a mistake in the contract and, if this does happen, you won't be able to rely on rectification.

On the other hand, if you do have a small claim of up to $15,000, you can go to the Disputes Tribunal which has the power to vary contractual terms if the terms are "harsh or unconscionable", if a party was induced to enter into the contract by mistake, or if the contract doesn't reflect the parties' true agreement.

If you have any legal disputes or want advice regarding contractual mistakes, please contact any member of our Litigation and Disputes Resolution team.


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