The Travelers Insurance Co. v. Bailey

The plaintiff insurance company sold a life insurance policy with annuity provisions to the defendant. The policy was to provided for an annuity at age 65 for $500 a year for the balance of his life, ten years certain, with only a $40.90 semi-annual premium. There was a mistake on the form used to display the terms of the contract, and instead the policy produced an annuity obligation to pay $500 a month for life, one hundred months certain. The plaintiff never had such a policy, and would never have offered such a ridiculous bargain to the defendant.

The plaintiff sought to change the contract, but the defendant claimed it was plaintiff’s own negligence and the contract should not be changed. Trial court judgment for the plaintiff to change the contract.

Whether a plain written contract can be changed when there is definite evidence of a mistake in the written terms as opposed to the actual agreed terms.

Judgment affirmed.

Where there has been established beyond a reasonable doubt a specific contractual agreement between parties, and a subsequent error in the written terms of the agreement, the contract is subject to reformation if no party will be unfairly affected by the reformation.