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Rectification of Construction Contract

by nicholas gallina

This paper is an introduction to the rectifcation of construction contracts by rectifcation for common mistake.1 Rectifcation of a written instrument is an equitable remedy. Its purpose is to make a written instrument conform to the true agreement of the parties, in circumstances where, as a result of the parties’ common mistake, the written instrument fails to accurately express that true agreement.

KEY ELEMENTS OF A RECTIFICATION CLAIM In the High Court decision of Simic v New South Wales Land and Housing Corporation [2016] HCA 47 (Simic), Gageler J, Nettle J and Gordon J stated a party seeking to rectify a written contract must establish that:3 (a) the contracting parties had a common intention (whether or not this intention amounted to an enforceable agreement) in respect of a particular matter in the instrument to be rectifed; (b) the common intention existed at the time of the execution of the contract; and (c) as a result of the parties’ common mistake, the written contract did not express that common intention. There is no requirement for communication of the common intention by express statement.

However, the alleged common intention must be the actual intention of both parties, viewed objectively from their words or actions. Unless those matters are established, the ‘hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties’cannot be displaced.

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