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
  • Mistake of fact and mistake of law
  • The effects of mistake
  • Common mistake
  • Effect of common mistake
  • Common mistake in equity
  • Mutual mistake
  • Unilateral mistake
  • 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.

For guidance on dealing with mistakes in the execution of documents see Practice Note: Deeds—Failure to comply with formalities and other defects and our Execution toolkit, in particular, The Basics—Q&As—Mistakes in executing documents.

For more guidance where parties choose to correct a mistake by agreeing an amendment to the operative parts of a contract, see Practice Note: Contract variation.

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

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