Mutual Mistake

In one sentence

Both parties are wrong about a basic fact when they sign a contract.

Plain English

A mutual mistake occurs when both the buyer and seller (or both parties to any contract) are mistaken about the same important fact at the time they agree. Neither party is trying to trick the other—they're both simply wrong. Courts are most sympathetic to mutual mistake claims because it seems unfair to hold someone to a deal based on a shared misunderstanding. The mistake must be about a material fact, not just about the value or quality of the deal.

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Example

A collector and an antique dealer agree to buy and sell a desk for $5,000. Both believe it's from the 1800s. Later, they discover it's actually from the 1950s. This is a mutual mistake about the desk's age, and either party could potentially void the contract.

Used in a sentence

“The court rescinded the contract based on mutual mistake when both parties discovered the house had been built on contaminated land.”

Related terms

Doctrine of Mistake

A contract may be voided or reformed when both parties made a fundamental error about key facts.

Contract

A legally binding agreement between two or more parties to do or not do something.

Contractual Intent

The parties' mutual intention to be legally bound by their agreement.

intent

The defendant's conscious purpose or knowledge that their actions would cause a particular result.

Express Warranty

A clear, direct promise about a product's quality, performance, or characteristics.

Material Alteration

A significant change to a contract or document that affects its meaning or enforceability.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.