Mistakes in a contract can often lead to various legal problems. Under contract laws, a contract mistake can either be mutual or unilateral. A mutual mistake is where both parties are mistaken about one of the terms in a contract. A unilateral mistake is where only one party is mistaken about a contract term.
Unilateral mistakes tend to raise very specific concerns in a contract arrangement. Since only one party is mistaken, there is a danger that the non-mistaken party might take advantage of the other party’s mistake. For instance, a common mistake is where one party is mistaken about the type of product in the contract. If they end up receiving a different product than was expected, it can create a legal dispute.
When a party to a contract makes a unilateral mistake, it may require legal intervention to remedy the dispute. In most cases, a claim can be filed so that the courts can determine the nature of the mistake. In most cases, the court may prescribe a solution for the dispute depending on the type of mistake. Remedies for a unilateral mistake may include:
- Contract reformation: This is where the mistaken part of the contract is allowed to be re-written (reformed). This is available for mistakes where only one party is mistaken and the other party was not aware of the mistake.
- Contract rescission: This where the entire contract is cancelled (rescinded), and the parties are "restored" to their original position before the contract was made. This is only allowed where the non-mistaken party knows of the mistake (or should have known about the mistake).
Thus, courts may often have to look back into the parties’ prior dealings to determine whether the other party knew or should have known about a mistake. This can often involve much deliberation and may require an examination of various business documents from past interactions. In some cases, a monetary award may be required to help restore the parties to their original positions.
Mistakes in a contract are very specific legal issues, and often require the help of a lawyer. You may wish to enlist the services of a lawyer if you need help with a contract. A qualified business attorney can help resolve disputes such as those involving unilateral mistakes, mutual mistakes, or other issues. Also, your lawyer can advise you during the actual court proceedings.