In contract law, a mistake can have significant consequences for both parties involved. Quizlet, an online study platform, defines a mistake as “an error or oversight that leads to an incorrect understanding or conclusion”. When it comes to contract law, a mistake can be divided into two categories: unilateral mistake and mutual mistake.
A unilateral mistake is when only one party makes a mistake about an important aspect of the contract. For example, imagine that a seller mistakenly believes that the price of a product is $100 when it is actually $200. If the buyer knows that the price is $200, they may try to take advantage of the seller`s mistake and offer to pay only $100. However, if the seller can prove that they made a unilateral mistake and that the buyer knew or should have known about the mistake, the contract may be voided or reformed to reflect the correct price.
A mutual mistake, on the other hand, is when both parties make a mistake about an important aspect of the contract. In this case, the contract may be voided or reformed if both parties can prove that they were mistaken and that the mistake was material, meaning that it would have affected their decision to enter into the contract in the first place. For example, imagine that two parties enter into a contract to buy and sell a piece of land. However, they both mistakenly believe that the land is zoned for commercial use when it is actually zoned for residential use. In this case, the contract may be voided or reformed because the mutual mistake about the zoning of the land would have affected their decision to enter into the contract in the first place.
In summary, a mistake can have significant consequences in contract law, leading to a voided or reformed contract. Unilateral mistakes occur when only one party makes a mistake about an important aspect of the contract, while mutual mistakes occur when both parties make a mistake about an important aspect of the contract. It is important to carefully review and understand the terms of a contract before signing it to avoid any potential mistakes and their consequences.