Getting a Number Wrong in a Contract

Thanks to this post on The Employer Handbook, @Eric_B_Meyer‘s blog, I learned about a severance agreement that provided for $2,747,400 in severance pay instead of the $80,805.97 that the parties had previously agreed on.

The error arose because the company’s HR person put in the contract the total amount of severance when they should have put in the amount per week. The result was that the total severance amount was 34 times what it should have been.

The lessons to be learned from this are pretty basic: First, be careful out there. And second, don’t be surprised if a contract party tries to take advantage of what is clearly a mistake. In this case, the Michigan Court of Appeals wasn’t having any of it, but don’t count on courts to fix your mistakes! That’s something I wrote about in this 2010 post.

Putting on my pedantic-so-and-so hat, I suggest that what we’re dealing with here isn’t a typo. In this 2010 post I offer a taxonomy of typos in contracts. I use this definition of a typo: “An error while inputting text via keyboard, made despite the fact that the user knows exactly what to type in.” In this case, the user didn’t know what to type in. The HR person didn’t commit a typo; they made a mistake.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.