Liability for errors in a contract – what you need to know

Three different things called an "error in the contract"

In practice one word covers situations with entirely different legal consequences. It is worth separating them, because the available remedy depends on the classification.

1. A defect of intent — a party entered the contract under a mistaken understanding of its content. This concerns the substance of the transaction, not the motives behind it.
2. A drafting slip — a typo, a wrong account number, a transposed digit in an amount. Where the parties' actual intention was aligned, interpretation under Article 65 of the Civil Code governs, not the literal wording.
3. A gap or badly built clause — the contract is valid but does not resolve the situation that has arisen. It is supplemented by default statutory rules and by custom.

When a declaration can be avoided

Relying on mistake requires two conditions: the mistake must concern the content of the legal act and must be material — such that, judged reasonably, the party would not have made a declaration in those terms had it known the true position. For contracts for consideration a third condition applies: the other party must have caused the mistake, known of it, or been able to notice it easily.

Avoidance takes effect through a written declaration made to the other party within one year of discovering the mistake. The period is a strict cut-off, so its expiry definitively closes that route. Deception is treated separately — there, the requirement that the mistake be noticeable falls away.

Who answers for a badly drafted contract

Where loss follows from improper performance of an obligation, the contractual regime applies: the injured party shows the loss, the improper performance and the causal link, while the debtor's fault is presumed. It is for the debtor to show that due care was taken.

Between professionals, care is assessed with regard to the business character of the activity. The party preparing the draft therefore answers to a stricter standard than the party that merely signed it. That does not relieve the other side of the duty to read the document — in negotiations between businesses, courts are reluctant to accept surprise at the terms of one's own contract.

Limitations of liability and their boundaries

Parties may vary the scope of liability by contract, but not without restriction. A clause excluding liability for loss caused intentionally is void. Monetary caps are effective, yet in cases of gross negligence they are sometimes challenged as contrary to principles of social conduct.

• A contractual penalty stipulated solely for failure to perform a monetary obligation is void.
• The amount is subject to reduction where the obligation has been substantially performed or the penalty is grossly excessive.
• Claiming damages above the contractual penalty requires an express provision.

Putting it right: what to do once an error surfaces

The first step is to establish whether the error affects the validity of the contract or only its performance. The second is written notice to the counterparty together with a proposed correction. An amendment signed without delay costs less than a dispute over interpretation, even if it requires a concession elsewhere.

If the other side refuses to correct it, the negotiation record gains weight: earlier drafts, correspondence, meeting notes. When interpreting declarations of intent a court examines the parties' shared intention and the purpose of the contract, and pre-contractual material is often the only evidence of what was actually agreed.