Our Los Angeles Litigation Attorneys were recently asked to review and analyze the grounds for revising written contract provisions based on a claim in fraud, also referred to a contract reformation. Under California law, a contract may be revised on the application of a party aggrieved, so as to express the intention of the party, if through fraud or a mutual mistake, the written agreement does not truly express the intention of the parties. A reformation on these grounds can be done as long as the rights acquired by third persons are not prejudiced. See Cal. Civ. Code § 3399.
Pleading a reformation of contract requires demonstrating (1) the intended agreement intended but not executed; (2) the actual agreement in writing; (3) where or how the actual writing fails to reflect the intended agreement. If a reformation is claimed pursuant to fraud, then the fraud must be pled with the requisite specificity under California law.
The burden of proof carried through trial rests with the party seeking to avoid the actual written agreement. The party seeking to reform carries the burden of proof because it is presumed that “all the parties thereto intended to make an equitable and conscientious agreement.” See Cal. Civ. Code § 3400. The party carrying the burden must also prove the true intent of the parties by clear and convincing evidence. See Shupe v. Nelson, (1967) 254 Cal. App. 2d 693, 700. This evidentiary threshold is greater than the preponderance of evidence standard in most civil actions. If a party carries its burden, then a contract may be revised and then specifically enforced. See Cal. Civ. Code § 3402.