Definition - What does Mistake mean?

In contract law, a mistake occurs when the language in the contract causes one or both parties to misunderstand or misinterpret one or more key aspects of the deal. Depending on the circumstances, such a mistake may cause the contract to be rendered void from the outset. In other cases, a mistake may release one of the parties from their obligations under the contract.

Justipedia explains Mistake

There are two kinds of mistakes in contract law:

  1. Mistake of fact: There is a misunderstanding or wrongful assumption about a vital aspect of the contract based on the language therein. If it affects only one party involved in the contract, it is a unilateral mistake, and if it affects both parties, it is a mutual mistake.
  2. Mistake of law: There is a misinterpretation or wrongful assumption about the application of contract law based on the language included therein.
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