During the construction process, it is inevitable that mistakes will be made– you just hope yours isn’t so big that it bankrupts you.
Mistakes are categorized as either unilateral or mutual. That means just what it says. A unilateral mistake is one made by only one party while a mutual mistake is one that is shared by both parties. So if only you misunderstood the construction plans and specifications and thought you needed to order 1,000 feet of conduit instead of 100, this would be a unilateral mistake – your problem, without any immediate relief unless you could show that someone intentionally deceived you in some way. These mistakes happen more often than you’d think, especially in a construction setting where quantities, prices and dates are so critical. The likely result, when one makes such a mistake, is usually no remedy at all.
On the other hand, if both parties to an agreement are mistaken because a document fails to correctly reflect what they both intended, then a court will likely reform or recast the document to correct the error. An example may help illustrate this. Let’s say that a lumber yard advertises 4×8 sheets of oriented strand board for sale at $1.00 each. It actually meant to say $10.00 each. You go in and buy ten sheets, expecting to pay $10.00 but are charged $100.00. Who would be right? A case with similar facts held that you would be. The store made an offer which you accepted. Though this may not have been the offer it actually intended to convey and it mistakenly left out a digit, the store would be out of luck. The law is clear in most every jurisdiction that in such circumstances what one may have intended does not really matter and is generally not enough to undo a deal.
However, if it can be shown that the non-mistaken party actually knew that the other party just didn’t understand the agreement, a court may step in. It may cancel the agreement (this is called contract recession), meaning the parties are no longer bound by that agreement and are back in the same position before they entered into the agreement. Or, if both parties misunderstood the agreement, the court may modify the agreement (known as contract reformation) to correctly reflect the parties’ understanding. But don’t count on either of these remedies to always save the day. Courts are reluctant to alter agreements, even when the result may be disastrous to the one making the mistake.
This article first appeared in the April 2014 issue of The Journal of Light Construction.