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Rectification of Instrument under SRA


Rectification of Instrument
Rectification of Instrument

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Provisions and Procedures under Section 26


Section 26 of the Specific Relief Act provides for the rectification of contracts or other instruments in writing when they do not express the real intention of the parties due to fraud or mutual mistake.



Under this section, either party or their representative-in-interest can file a suit to have the instrument rectified. 



Alternatively, in any suit where a right arising under the instrument is in issue, the plaintiff can claim in their pleading that the instrument be rectified, or the defendant can ask for rectification in their defence.



If, in a suit seeking rectification, the court finds that the instrument does not express the real intention of the parties due to fraud or mistake, it may direct rectification to express that intention, provided it does not prejudice rights acquired by third parties in good faith and for value.

 
 

Additionally, a contract in writing may be first rectified and then, if the party claiming rectification has requested it in their pleading and the court deems it appropriate, specifically enforced.



However, relief for rectification cannot be granted unless it has been specifically claimed, though the court may allow the party to amend their pleading to include such a claim at any stage of the proceeding.



Aligning Intentions with Legal Instruments


Rectifying an instrument under Section 26 entails the court's assessment of the parties' original intentions concerning the instrument's meaning and legal consequences at the time of contract formation. If a contract's terms contradict the parties' intentions, equity traditionally empowers the court to rectify it to align with their intent. 



As Story noted, the efficacy of equity would diminish if it only addressed blatant frauds but permitted innocent mistakes to cause significant harm against the parties' wishes. Thus, the court aims to ensure that rectification reflects the parties' mutual understanding when entering the contract, rather than their long-term intentions.



Importantly, there's no statute of limitations for discovering fraud or mistake. Once fraud or mistake is uncovered, the affected party can initiate a rectification suit regardless of when the error occurred. Rectification, however, requires a distinct claim for relief. 



Nonetheless, the court retains jurisdiction to rectify obvious or undisputed errors informally, without formal rectification proceedings.


Prerequisites for Rectification


Rectification is essentially aligning a document with the actual agreement between parties, meaning that without an agreement, there can be no rectification. The prerequisites for applying the rule of rectification include:



  • Existence of a Genuine Agreement: There must be a genuine agreement that differs from the expressed agreement in the document to be rectified. This genuine agreement should reflect the true intentions of the parties involved.


  • Fraud or Mutual Mistake: The document in question should not accurately express the intention of the parties due to fraud or a mutual mistake. Notably, unilateral mistakes typically do not warrant rectification.


  • Clear Proof of Fraud or Mistake: Before rectifying the instrument, the court must establish, through clear evidence, that fraud or mistake occurred in drafting the document. It's crucial to ascertain the actual intention of the parties in executing the document.


  • Protection of Third Party Rights: Rectification should not prejudice the rights of third parties who have acquired interests in good faith and for value. This ensures that rectification does not unfairly impact individuals who were not involved in the original agreement.



Mutual Mistake in Rectification


Indeed, rectification of a document typically requires a mutual mistake rather than a unilateral one:



  • Mutual Mistake vs. Unilateral Mistake: Rectification usually involves a mutual mistake, where both parties share the same erroneous belief about a particular aspect of the agreement. In contrast, a unilateral mistake occurs when only one party is mistaken, which might not warrant rectification of the document.


  • Requirement of Common Intention: For rectification to be justified, it's crucial that both parties had precisely the same intention regarding the inaccurate point in the document. This requirement underscores the necessity of a mutual mistake rather than a mere difference in understanding.


  • Precedent Examples: Cases like Chandan Singh v Atma Ram and Wallington v Townsend illustrate scenarios where rectification was either granted or denied based on the presence or absence of a mutual mistake. In Chandan Singh v Atma Ram, the wrong plot number in the deed was deemed a mutual mistake, warranting rectification. Conversely, in Wallington v Townsend, the court rejected rectification as the mistake was not mutual.


  • Remedies for Unilateral Mistake: In cases of pure unilateral mistake, the remedy might involve rescission of the contract or refusal of an order of specific performance. However, rescinding a valid contract due to unilateral mistake is rare. Courts typically require evidence that the other party had actual knowledge of the mistake before considering rescission or rectification.


  • Knowledge of Third Parties: If a third party had knowledge of the mistake, they cannot claim to have acquired their rights in good faith. In such cases, rectification may be permissible without causing prejudice to the rights of the third party.

 
 

Rectification for Mistake of Law


Mistake of law can indeed be grounds for rectification, as implied by Section 26 and supported by English equitable doctrine. The essence of Section 26 allows the court to rectify an instrument to align the legal consequences with the intentions of both parties.



For example, if the parties believed they had made an annuity redeemable but the drafted clause did not have that legal effect or contravened a statute, rectification could be sought.



However, there are limits to this doctrine. Rectification may not be applicable if the mistake involves using language that, while intended to perfect the agreement, results in a different legal outcome from the common intention. Allowing rectification in such cases would extend the doctrine too broadly.



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