What Happens When Both Parties Make a Mistake?
Sometimes, both sides in a contract believe something to be true. Later, they find out it was not true. If that belief was about an important fact, the law calls it a “mutual mistake of fact.” When this kind of mistake happens, the agreement becomes void. This means the law treats the contract as if it never existed.
What Kind of Mistake Makes a Contract Void?
The mistake must be about a fact that is essential to the agreement. For example, if both parties think a certain item exists when in reality it does not, then that is a mistake of fact. It must be about something real and important, not about what something is worth.
Example to Understand It Better
Let’s say a person agrees to sell a painting, thinking it is original. The buyer also thinks it is original. Later, they both find out that the painting is a copy. Because they both believed a wrong fact that was important to the agreement, the contract becomes void. Neither side has to keep their promise under this contract.
Value Is Not a Mistake of Fact
However, if the mistake is only about the value of the item, the contract is still valid. For instance, if you think a car is worth more than it really is and still agree to buy it, that is not a mistake of fact. The law says that an incorrect guess about value does not make the contract void.
How to Deal With a Contract Based on Mutual Mistake
If you think you signed a contract based on a mutual mistake of fact, you should speak to a legal expert immediately. A lawyer can help you cancel the agreement and protect your rights. The sooner you act, the better chance you have of avoiding legal problems.
Why Understanding This Law Matters
Knowing about mutual mistakes in contract law helps you avoid bad contracts. It also gives you a way out if you signed an agreement based on wrong facts. This can save your business time, money, and stress.