Legal Definition of Mistake in Contract

Mistakes in contracts can be costly and can often lead to disputes and legal battles. In legal terms, a mistake is defined as an error made by one or both parties to a contract at the time of entering into the agreement. It can be categorized into two types- mutual mistake and unilateral mistake.

Mutual Mistake

A mutual mistake in contract law is a situation where both parties to a contract have made an error. It is a situation where both parties were mistaken about the same material fact at the time of entering into the agreement. In such a case, the parties may have different understandings of the contract, and this can result in unintended consequences, leading to disputes.

Under the law, a mutual mistake can invalidate a contract entirely or partially, depending on the extent of the mistake. If the error materially affects the contract`s terms and objectives, then the contract can be voided from the beginning. However, if the mistake has no significant impact on the contract`s purpose, then the contract can be reformed to reflect the parties` original intentions.

Unilateral Mistake

A unilateral mistake, on the other hand, is a situation where one party to the contract makes an error that the other party is aware of. It is a mistake made by one party that the other party takes advantage of. In legal terms, this is referred to as a mistake of one party, as opposed to a mutual mistake.

In cases of a unilateral mistake, the contract can be deemed invalid if it can be shown that the other party knew or should have known about the error, yet proceeded to take advantage of the mistake. However, if the other party had no knowledge of the error, the contract may be upheld, and the mistaken party may be held liable for any losses suffered due to the mistake.


In conclusion, a legal definition of a mistake in contract refers to an error made by one or both parties at the time of entering into an agreement. The two types of mistakes are mutual and unilateral mistakes, and they can have different legal implications. As a professional, it is important to ensure that articles on legal issues are accurate, informative and easy to understand for readers.