Reformation

Ravenna and her insurer both intended a 750,000 dollar face amount, but a clerical error at the home office printed 75,000 dollars in the issued contract. The mistake surfaces when a claim arises. Her remedy is to seek:

1. A.Rescission, which unwinds the policy and returns the premiums she paid.Rescission destroys a contract both parties wanted and would leave her with no coverage at all. The problem is the wording of an agreement both sides intended, not the existence of the agreement.
2. B.Nothing, because the entire contract provision makes the issued policy conclusive as written.The entire contract provision identifies which documents make up the agreement. It does not bar equitable relief where the document misstates what both parties agreed.
3. C.Reformation of the policy to state the 750,000 dollar amount both parties actually agreed upon.Reformation is the equitable remedy for a scrivener's error or mutual mistake, correcting the writing so it reflects the agreement the parties actually reached.
4. D.Estoppel, preventing the insurer from denying that the higher amount was intended.Estoppel prevents a party from contradicting a position others relied on. It is not the mechanism for correcting a document, which is what reformation does directly.

Why: Where a written contract fails to express what both parties actually agreed, the equitable remedy is reformation: a court rewrites the document to match the true agreement rather than enforcing the mistaken text or destroying the contract. Reformation requires proof of a mutual mistake or a scrivener's error, and it is not available for a unilateral change of mind. Rescission would unwind a contract both sides still want, and the entire contract provision addresses which documents form the agreement rather than typographical errors within them.

Both Ostara Quill and Blackmere Life intended her policy to carry a 750,000-dollar face amount. The application shows that figure, the negotiations show that figure, and the premium quoted and paid was the premium for that figure. Because of a clerical error, the issued schedule page reads 570,000 dollars. Ostara dies and the insurer tenders 570,000 dollars. Which remedy best fits these facts?

1. A.Rescission, because a mutual mistake means the parties never reached an agreement at all.Rescission unwinds a contract and restores the parties to their prior positions, which would leave the beneficiary with a premium refund and no death benefit. The parties here plainly did reach an agreement; only the writing is wrong.
2. B.Estoppel, because the insurer's own error bars it from denying the higher amount.Estoppel requires a representation that another party relied upon to her detriment. The typographical error on the schedule page was not a representation Ostara relied on; she believed and paid for the higher amount all along.
3. C.Waiver, because by accepting the premium for the larger amount the insurer voluntarily gave up the lower figure.Waiver is the intentional relinquishment of a KNOWN right. The insurer never knew of the discrepancy, so it cannot have intentionally surrendered anything.
4. D.Reformation, because a court may correct a written contract that, through mutual mistake, fails to express the agreement the parties actually made.Correct. Reformation is precisely the remedy for a scrivener's error or mutual mistake in the writing. The application, the negotiations and the premium actually charged all prove the real bargain was 750,000 dollars.

Why: REFORMATION is the equitable remedy for a writing that, because of mutual mistake or a scrivener's error, fails to express the agreement the parties actually reached. The court does not make a new bargain; it corrects the document to match the bargain proved by the application, the negotiations and the premium actually charged. Reformation preserves the contract, which is exactly what the beneficiary wants here.