Mistake in a Contract: Reformation and Rescission When the Writing Is Wrong

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

Reformation of a contract is the remedy that corrects the writing to state what the parties agreed, and it fits a shared drafting error. When a written contract does not truly express the parties' intention because of a mutual mistake, a California court may revise it. (Civ. Code, § 3399.) The deal survives at the agreed price. Rescission, which cancels the contract, is the alternative when the mistake goes to the deal itself. Kolmogorov Law, P.C. litigates both remedies for businesses.

Call (909) 235-6116 or contact us online to discuss a signed contract that says something different from what was agreed.

Two kinds of mistake: in the writing, or in the deal

Sometimes the parties agreed on everything and the document recorded it wrong. The remedy is to correct the paper.

Sometimes the document says what both sides meant, but one or both of them were wrong about a fact the deal rested on. Apparent consent is not real or free when it is obtained through mistake. (Civ. Code, § 1567.) The remedy, if there is one, is to undo the contract.

What the Civil Code counts as a mistake

A mistake may be of fact or of law. (Civ. Code, § 1576.)

A mistake of fact is an unconscious ignorance or forgetfulness of a past or present fact material to the contract. It also covers a belief that something material to the contract exists, or once existed, when it does not or did not. The mistake must not be caused by the neglect of a legal duty by the person who made it. (Civ. Code, § 1577.)

A mistake of law counts in only two situations. In the first, all parties misunderstood the law in substantially the same way, each believing they understood it. In the second, one party misunderstood the law, and the others knew it and did not correct the error. (Civ. Code, § 1578.)

Reformation: correcting the writing under Civil Code section 3399

A written contract may be revised, on the application of a party aggrieved, when it does not truly express the intention of the parties. The statute lists three causes: fraud, a mutual mistake of the parties, or a mistake of one party that the other knew or suspected at the time. The contract is revised so as to express that intention. Revision goes only so far as it can without prejudice to rights that third persons acquired in good faith and for value. (Civ. Code, § 3399.)

The court presumes that all parties intended to make an equitable and conscientious agreement. (Civ. Code, § 3400.) It may ask what the instrument was intended to mean and what its legal consequences were meant to be, not only what words were meant to appear. (Civ. Code, § 3401.) A contract may also be first revised and then specifically enforced. (Civ. Code, § 3402.) Our page on specific performance covers the second step.

Where the pleadings put a mistake in the writing in issue, the parol evidence rule does not exclude evidence relevant to it. (Code Civ. Proc., § 1856, subd. (e).) Our page on the parol evidence rule covers the rest of that statute.

Unilateral mistake: when only one side got it wrong

If the other party knew or suspected the error and signed anyway, section 3399 treats the case like a mutual mistake, and the writing can be corrected.

If the other party had no reason to know of the error and did not cause it, section 3399 does not reach the case. The mistaken party may still be able to rescind. The California Supreme Court requires four showings. The mistake concerned a basic assumption on which the party made the contract. It had a material effect on the agreed exchange that is adverse to that party. That party does not bear the risk of the mistake. And enforcing the contract would be unconscionable. (Donovan v. RRL Corp. (2001) 26 Cal.4th 261.)

In that case a seller's advertisement carried a price about a third below the intended one because of a printing error. The court allowed rescission. It also explained that ordinary carelessness is not the neglect of a legal duty that bars relief under section 1577.

Rescission when the mistake goes to the deal

A party may rescind a contract if its consent was given by mistake. (Civ. Code, § 1689, subd. (b)(1).) Consent counts as obtained through mistake only when it would not have been given had the mistake not existed. (Civ. Code, § 1568.)

Our page on rescission of a contract covers the notice and restoration steps. If the wrong belief was planted by the other side, the claim may also be fraud, discussed on our page about fraudulent inducement.

How these disputes reach a business

A supply agreement states the unit price as $14.50. Every quote, email, and purchase order before signing said $41.50. The buyer insists on the printed number.

A commercial lease amendment was meant to extend the term by five years. The signed version, built from the wrong template, also deletes the tenant's renewal option. Neither side discussed deleting it.

Proof, deadlines, and first steps

The party asking for reformation must prove what the real agreement was. Useful evidence includes the term sheet, the drafts with their tracked changes, the emails that settled each term, and conduct after signing that matches the true deal.

An action for relief on the ground of mistake must be brought within three years. The claim is not deemed to accrue until the aggrieved party discovers the facts constituting the mistake. (Code Civ. Proc., § 338, subd. (d).) An action based on rescission of a written contract has its own four-year period, which for mistake also runs from discovery. (Code Civ. Proc., § 337, subd. (c).) Discovery includes inquiry notice. A party aware of facts that would make a reasonably prudent person suspicious is charged with what an investigation would have revealed. (Miller v. Bechtel Corp. (1983) 33 Cal.3d 868, 875.)

When you find the error, tell the other side in writing what the term should be. Do not keep performing on the mistaken term without a written reservation. Check whether a lender, assignee, or buyer has relied on the document as written. If the words are merely unclear, the dispute is about interpretation, covered on our page about contract ambiguity.

What to bring to the first meeting

The signed contract and every earlier draft, with dates.
The term sheet, quotes, or purchase orders that set the terms.
Emails and messages in which the disputed term was negotiated or confirmed.
Invoices, payments, and messages showing how the parties performed and when the error was found.

Frequently asked questions

The signed contract has the wrong price because of a drafting error both sides missed. Can we fix it or cancel it in California?

You can ask a court to fix it. California Civil Code section 3399 allows a court to revise a written contract that, through mutual mistake, does not express what the parties intended. You must prove the price actually agreed, for example with drafts and emails. Cancellation by rescission is available where consent to the deal itself was given by mistake.

What is a mutual mistake in a contract?

It is an error both parties shared. Under California law it may be a mistake in the writing, where the document misstates the agreed terms, or a shared wrong belief about a fact material to the contract. The first kind supports reformation of the document. The second may support rescission of the contract.

Can a contract be cancelled for a unilateral mistake in California?

Sometimes. The California Supreme Court allows rescission for one party's mistake of fact when it concerned a basic assumption, materially hurt that party, was not a risk that party bore, and would make enforcement unconscionable. Ordinary carelessness does not automatically defeat the claim. A mistake the other side knew or suspected can support reformation instead.

The other side noticed our typo before signing and said nothing. Can they hold us to the mistaken number?

Probably not, if you can prove they knew. California's reformation statute reaches a mistake of one party which the other at the time knew or suspected, and it lets the court correct the writing to match the real agreement. Proof of knowledge may come from the other side's own emails, internal approvals, and earlier drafts.

How long do you have to sue over a mistake in a contract?

California allows three years for an action for relief on the ground of mistake, and four years for an action based on rescission of a written contract. In both, the period does not start until the aggrieved party discovers the facts constituting the mistake, or learns facts that would make a reasonably prudent person suspicious enough to investigate. Do not wait for the deadline, because continued performance under the mistaken term can be offered as evidence that the writing was correct.

Talk to a California breach of contract attorney

If a signed contract does not say what your business agreed to, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is a business litigation firm in Irvine, California, that represents companies and their owners in court and in arbitration.

This page provides general information about California law and is not legal advice. Outcomes depend on the contract, the proof of what was agreed, and the court.