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IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Orion Analytics supplied Lotus General Insurance with a pricing tool, and a signed written contract described the licence period as two years. Both parties had in fact agreed orally on three years, and the writing recorded two by clerical mistake. Lotus wants the document corrected to reflect the true agreement. Which remedy applies?

Rectification is the applicable remedy. It is an equitable order correcting a written contract that, through a clerical mistake, fails to record what both parties actually agreed. Here the three-year term was agreed, so the court can amend the document to say so.

  1. ARectification of the written contract to match the parties' actual agreementCorrect
  2. BSpecific performance of the written two-year term
  3. CQuantum meruit for the third year
  4. DLiquidated damages for the clerical error
  5. Restitution of the licence fee in full

Explanation

Rectification is an equitable remedy that corrects a written document that fails to record the parties' true common intention because of a mistake. Here both parties agreed three years and the writing erred. Other remedies do not correct the document.

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