Delaware Business Litigation Report

Supreme Court Sets Reformation Rules

Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, C.A. 437, 2012 (May 9, 2013)

This is an important decision because it sets the rules for when a contract may be reformed for a unilateral mistake.  First, it is not a defense to a reformation claim that the other party failed to read the contract.   That may be a defense to a rescission claim, but not reformation.  Second, a unilateral mistake, known to the other party who remains silent, may justify reformation.  Third, the defense of ratification of such a mistake must be based on knowledge of the mistake.

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