Attorney's Column
Court: A Mutual Mistake in a Contract Can Be Corrected, But Buyer’s Remorse Can’t
By THOMAS H. WELBY, P.E., ESQ., and GREGORY J. SPAUN, ESQ.
In today’s highly technological world, computer-generated documents are still subject to the limitations of the human/keyboard interface, which limitations are manifested by the typographical error. While many of these errors are simply embarrassing, others can have financial import—such as those which work their way into price terms. Where this happens, a contractor is not without recourse because courts maintain the inherent power to correct clearly established mutual mistakes that make their way into contracts.
In a recent case of Titan Construction Services v Board of Managers of PS90 Condominium, however, a court reminds us that the tool of reformation is limited to genuine mistakes, and not what would be termed as “buyer’s remorse” in pricing.
Background
In July of 2016, Titan Construction Services entered into an agreement with the Board of Managers of the PS90 Condominium for Titan to perform certain terra cotta repair work on the PS90 building. The contract provided that the price for “TRC 02” work was $2.06 per square inch. The contract included an addendum which provided that the price for that work was $285 per square inch. The contract also had a unit price provision under which any additional terra cotta work added would be performed at the same price.
The original contract required Titan to repair 832 square inches of terra cotta. The condo ultimately added another 50,000 square inches, which Titan refused to do at the $2.06 per square inch rate, claiming that the rate was actually $285 per square inch. Titan submitted a $14-million change order accordingly. The condo refused to pay that rate, claiming there was a mutual mistake in the contract as to price, and $2.06 per square inch was the correct number. Titan proceeded with the work under protest, and sued to recover the monies it was claiming under the contract. The lawsuit ultimately went to trial on the issue of what the intended price was.
Decision
After trial, the court found that the agreed upon price was $2.06 per square inch, and that $285 was a square foot price (mathematically, $2.06 per square inch works out to slightly over $285 per square foot). The court relied upon statements made by Titan which conceded that “there was a bid submission of $2.06 that was changed later that day to $285 a square inch. In our view it should have been $285 a square foot, not square inch.”
The concession was supported by other evidence, such as Titan’s field reports, and other documents, which referred to the $2.06 number. In fact, the evidence established that the dispute arose only after the condominium sought to include extra work because Titan found it “financially infeasible” to perform so much work at $2.06 per square inch. The court found that Titan’s financial infeasibility could not control its decision, and that the mutual mistake had to be resolved at $2.06 per square inch, not $285. Accordingly, the court entered judgment in Titan’s favor for only $59,000, which was the amount for the work at $2.06 per square inch, minus some backcharges.
Comment
The court’s decision here made it clear that the parties always intended to proceed at $2.06 per square inch, and that the claim that the price was $285 for that same unit was a product of bidder’s remorse. While contractors may, for business reasons, price smaller, introductory jobs much lower than standard rates—think of that 99-cent-per-pound turkey at Thanksgiving; the store is losing money at that price, but is making it up when you buy the stuffing and the rest of the trimmings. But that does not give them the right to walk away from that price under a mistake theory once it is agreed upon.
One thing that strikes us about this case is the scope of the change order being a 6,000% increase in the scope of work (832 square inches of original work, with a 50,332-square-inch change order). While the mutual mistake did not work, there is a doctrine in the law that provides that where a change order is so significant that it was not within the reasonable contemplation of the parties at the time of the contract, it actually constitutes an entirely new contract because the change is considered a “cardinal change,” rather than simply a change order. As such, it would give the contracting party the opportunity to decline the work absent reaching a completely new agreement. It is not known whether a cardinal change argument would have prevailed here (because it wasn’t tried). Contract law and interpretations are not always simply plain reading and common sense. If you are faced with a similar situation, you should reach out to experienced construction counsel so that you can determine all of your options before proceeding.
About the authors: Thomas H. Welby, Esq., P.E., is General Counsel to the CIC and the BCA, and is the Founder and Senior Counsel to the law firm Welby, Brady & Greenblatt, LLP, with headquarters in White Plains, NY. Gregory J. Spaun, Esq., is General Counsel to the Queens and Bronx Building Association, and an attorney and a partner with the firm.
Published: October 16, 2025.