This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Where the parties have through mistake as to some collateral fact, entered into a valid contract, the terms of which are reduced correctly to writing, equity cannot reform such contract so as to express what the court thinks the parties would have agreed upon but for such mistake.1 Thus where two adjoining land owners, through mistake as to the true location of the boundary line, fix a line erroneously, and put this contract into writing, equity cannot reform the contract to fix the boundary at the true line,2 nor can the lessee of certain mineral rights have reformation because he took the lease in ignorance of an ancient reservation in a deed, giving him the right to such minerals.3 So where an assignee in insolvency represented to A that a certain sum was due on a certain claim, and unknown to such assignee, a payment had been made thereon, leaving the amount due less than that represented, no reformation reducing the amount to be paid for such claim could be made since the contract of assignment was exactly what the parties had agreed upon and no fraud intervened.4 Where A agreed to buy the interest of his partner B and an invoice was made, in which a mistake of five hundred dollars was made, and a price was agreed upon, on the basis of such invoice, no reformation can be had.5 So where A expressly released all partners except B from liability and subsequently learned that X was a dormant partner, X being financially responsible, A cannot have the release reformed to exclude X.6 The reason underlying the rule last given is that equity will not make a new contract for the parties imposing on one of them terms which he did not assume and did not intend to assume when he made the contract.7 It seems, however, that by some statutes equity may have power to reform a contract because of mistake in the inducement.8
1 Duke of Sutherland v. Heath-cote (1892), 1 Ch. 475; affirming (1891), 3 Ch. 504; Phillip Zorn Brewing Co. v. Malott, 151 Ind. 371; 51 N. E. 471; reversing, 46 N. E. 23; Dever v. Dever (Ky.), 44 S. W. 986; Wise v. Brooks, 69 Miss. 891; 13 So. 836; Curtis v. Albee, 167 N. Y. 360; 60 N. E. 660; De Voin v. De Voin, 76 Wis. 66; 44 N. W. 839.
2 Phillip Zorn Brewing Co. v. Malott, 151 Ind. 371; 51 N. E. 471; re-versing, 46 N. E. 23.
3 Duke of Sutherland v. Heath-cote (1892), 1 Ch. 475; affirming (1891), 3 Ch. 504.
4 Curtis v. Albee, 167 N. Y. 360; 60 N. E. 660.
5 De Voin v. De Voin, 76 Wis. 66; 44 N. W. 839.
6 Harbeck v. Pupin, 145 N. Y. 70; 39 N. E. 722.