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Correction generally applies to formal acts and instruments. These include transport, leases and share transfers. The correction may apply to multi-party supporting documents and agreements such as a pension plan or a fiduciary corporation. After the modern test that has been accepted in Ireland and England, a correction may be ordered, provided there is a common intention to continue with regard to the agreement. The parties must have agreed until they have executed the instrument. Correction will be possible if the instrument does not comply with their common agreement. The Court of Appeal clearly did not take lightly its deviation from Lord Hoffmann`s diktats at Chartbrook. The judgment contains a detailed and useful analysis of the origins and evolution of the Rectification Act and provides a welcome clarification of the appropriate approach that courts should take to correct a contract on the basis of the intentions of the parties. Mistakes can happen.

What happens if, as a result of such an error, the parties enter into a contract that does not reflect their prior agreement or intentions? Such situations can yield economically absurd results or lead a party to assume incriminating obligations that it has never taken into account when negotiating the contract. The English court has strong authority to rectify a contract in order to satisfy the intentions or prior agreement of the parties. However, the circumstances under which the courts will exercise this power, and in particular the relevance of the states of mind, have been the subject of significant controversy over the past decade, after Lord Hoffmann, in an influential house of Lords decision, Chartbrook Ltd/Persimmon Homes Ltd. [2], constitutes rectification against the Parol rule and constitutes an established exception. The Parol rule is that oral evidence is not admissible or permissible to add, vary or contradict a written instrument. However, correction is an exception to the rule. As this case shows, errors are inevitable, especially in the case of large and complex business transactions. Although the Court of Appeal upheld the judge`s decision to follow the decision, it will remain a difficult task to convince a court to correct a contract and it should be noted that the facts in this case were unusual (in particular, the fact that the IRSAs had complied with an existing specific obligation, which had a significant influence on the discussion between the parties ahead of the implementation of the IRSA). In this context, a final lesson from the judgment is that the best way to protect against errors is to maintain both good internal records and bipartisan correspondence that shows a common understanding of the agreement, so that, in the worst case, a right to rectification can be fully demonstrated. In line with the trend towards a more literal approach to contract interpretation, which focuses on the natural and ordinary meaning of the language used[3], the principles of alternative remedies to correction have become more important. The Court of Appeal`s decision in FSHC Group Holdings Ltd/GLAS Trust Corp Ltd is therefore a positive and timely confirmation of the law in this area. The court ruled in Persimmon`s favour, but on the basis that Chartbrook`s interpretation of the formula makes no commercial sense.

It was therefore not necessary to rule on an alternative motion for rectification by Persimmon. Nevertheless, Lord Hoffman, who gave his final decision to the House of Lords, expressed an opinion on the question of rectification that the other members of the Appeal Board were „consensual or saw no reason to distinguish themselves from them. However, there may be a unilateral error in the sense used in contract law where one party feels that a particular clause is contained in the contract and the other person knows that the other party believed that way.