Mistake in contract law

The following Commercial practice note provides comprehensive and up to date legal information covering:

  • Mistake in contract law
  • What is a mistake?
  • Types of mistake
  • Common mistake
  • Effect of common mistake
  • Statutory rule for sale of specific goods
  • Common mistake in equity
  • Mutual mistake
  • Unilateral mistake
  • Mistake as to identity of a person
  • More...

Mistake in contract law

This Practice Note considers the legal concept of mistake in contract law. It examines common mistake, mutual mistake, unilateral mistake, mistake as to identity and mistake as to the document signed (non est factum). It also considers the impact of each of these types of mistake on the contract and the correction of mistakes by rectification or construction.

What is a mistake?

A mistake is an erroneous belief held by one or both parties to a contract at the time of its formation. A mistake may arise as to the:

  1. subject matter or terms of the contract

  2. identity of the other party

  3. nature of the transaction

Mistake should not be confused with a misrepresentation where a party is induced to enter into a contract on the basis of a misrepresentation, whether innocent, negligent or fraudulent. For more details, see Practice Note: Pre-contractual representations and statements.

Types of mistake

There are three types of mistake of fact:

  1. common mistake—both parties make the same mistake

  2. mutual mistake—each party makes a different mistake, and

  3. unilateral mistake—only one party makes the mistake and the other party is aware of the mistake

For discussion on the terminology used in respect of the different types of mistake, see: The categories and terminology of mistake: Contract: The Law of Contract (Common Law Series) [4.79].

Common mistake

Common mistake is a common law doctrine that applies where

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