Remedies.
Mistake, fraud, undue influence, and duress may make the agreement voidable or, in some instances, void. The following remedies are then available.
a) Rescission. If the contract is voidable, it can be rescinded or set aside by the party who has been injured or of whom advantage has been taken. If not avoided, however, the contract is valid and binding. In no case can the other party, the wrongdoer, set aside the contract. If tbe agreement is void, neither party can enforce it and no act of avoidance is required by either party to set the contract aside.
FACTS:
Thompson bought an automobile on credit from Central Motor Co. The contract required him to pay 35 monthly installments of $125 and a final installment of $5,265. The sales manager fradulently assured Thompson that when the last payment was due it could be refinanced by signing another note for that amount at 8 percent interest. Thompson agreed to make the purchase and signed the contract and a note in reliance on the assurance that he could refinance the final payment. Thereafter Central Motor refused to finance the final payment unless Thompson promised to pay 12 percent interest. He refused to do so, and returned the car. Central sold the car and then sued Thompson for the balance remaining due.
DECISION:
Judgment for Thompson. The misrepresentation of the sales manager constituted fraud which permitted Thompson as the victim of the fraud to avoid the contract and the note, [Central Motor Co. v Thompson (Tex Civ App) 465 SW2d 405 (1971)]
(b) Damages. If the other party was guilty of a wrong, such as fraud, as distinguished from making an innocent mistake, the injured party may sue for damages caused by such a wrong. In the case of the sale of goods, the aggrieved party may both rescind and recover damages; but in other contracts, the victim must choose one of these two remedies.19 Thus, a buyer rescinding a contract for the sale of a house because of fraud cannot also recover damages for the fraud.
(c) Reformation of Contract by Court. When a written contract does not correctly state the agreement already made by the parties, either party can have the court correct or reform the writing to state the agreement actually made. An action for reformation may be necessary because a change of circumstances or the occurrence of certain events may cause the other party to refuse to change the contract, for example, if A obtains a collision insurance policy on an automobile but through mistake the policy describes the wrong car, A can obtain a decree of court declaring that the policy covers the car that A and the insurance company intended to insure rather than the car wrongly identified in the policy. The insurance company would have gladly made the correction prior to any loss being sustained, but if the car A intended to insure had been damaged, court reformation would be necessary.
FACTS:
Kadish Pharmacy and other pharmacies made a contract with Blue Cross Blue Shield to provide prescription drugs to subscribers of Blue Cross Blue Shield, which in turn would reimburse the pharmacies. Kadish and the other pharmacies claimed that the contract with Blue Cross Blue Shield should have specified that the reimbursement to them would be at the customary rate charged by them. There was no proof that the parties had ever agreed to this as a term of their contract. Kadish sued to reform the contract.
DECISION:
Reformation wilt not be allowed to rewrite a contract to include a provision that one parry subsequently realized should have been included. It is only allowed to correct the written contract to state what in fact had been agreed to by the parties. [Kadish Pharmacy, Inc. v Blue Cross Blue Shield, ___App Div 2d ___, 494 NWS2d 354