New Delaware corporate rectification procedure permits various corporate slips to be rectified without a court proceeding, if uncontested

As the Performance Industries and Shafron decisions of the Supreme Court are non-tax, contract cases, the narrower scope given by them to the rescission doctrine - as contrasted to the Juliar line of cases - is justified. The principal concern in such cases is unjust enrichment as between the parties to the instrument. In these contractual cases, “rectification is designed to prevent a written instrument from being used as an engine of fraud or of misconduct equivalent to fraud. The remedy restores the parties to an original oral bargain so that one party cannot rely on the strict terms of a written instrument that contravenes the true arrangement between the parties.” In tax cases, the injustice of mistake-based taxation trumps the policy that underlies the sanctity of contracts. In the successfully contested tax cases, “the Crown, which lacks privity of contract, reaps an undeserved windfall, yet strives to rely on the strict terms of the instrument to justify its enrichment.”

The Delaware corporate law was recently amended to allow various types of corporate slips consisting of defective corporate acts that arise from a failure of authorization, including those found in both public records and private instruments, to be rectified without a court proceeding being required in the first instance. If adopted in Canadian corporate legislation, the process could for example have fixed the mistake in Dale – and since the Crown does not oppose that type of correction, the solution could proceed privately.

Neal Armstrong. Summary of Jeff Oldewening, Rachel A. Gold and Chris Sheridan, "Statutory Ratification", Canadian Tax Journal, (2016) 64:1, 293-325 under General Concepts – Rectification.