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Reformation

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Definition Edit

Reformation (also called equitable reform) is a remedy available for breach of contract. Where the terms of the contract do not reflect the understanding of the parties, a court of law may reform the terms of the contract to settle the dispute. The contract is legally modified to reflect the actual agreement as understood by the parties.

Non-compete contract Edit

The reformation doctrine "prevailing in some states requiring that courts may rewrite a non-compete contract so as to render it non-defective. Unlike blue-pencil doctrine, this may entail insertions of new text."[1] "This allows more flexibility than the blue pencil rule and increases the likelihood of a non-compete being upheld in some form, all else equal. It may also encourage firms to take risks in the writing of contracts, including provisions likely to be struck down. If workers do not have a good sense of which parts of a contract are enforceable, then these untenable provisions may still affect their behavior. On the opposite end of the spectrum, some states simply do not allow any judicial modification of contracts, but instead hold that any unenforceable provisions render the entire contract unenforceable. This is sometimes known as 'red-pencil' doctrine."[2]

References Edit

  1. Non-Compete Contracts: Economic Effects and Policy Implications, at 14.
  2. Id. at 15.

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