Define: Agreement Mistake

Agreement mistake, in legal terms, occurs when parties to a contract enter into an agreement under a mistaken understanding of material facts. This mistake can involve a misunderstanding about the subject matter of the contract, the terms of the agreement, or other critical aspects that influence the parties’ decision to enter into the contract. Agreement mistake may render the contract void or voidable, depending on the nature and significance of the mistake, and whether it concerns a fundamental aspect of the contract. In such cases, the parties may seek remedies such as rescission or reformation of the contract to correct the mistake and restore fairness to the agreement. The legal principles surrounding agreement mistake aim to ensure that contracts are entered into voluntarily and based on a mutual understanding of the terms and obligations involved.

This kind of mistake in contract occurs where there is no real “meeting of minds” between the contracting parties, and the contract is therefore void or voidable. This may arise because the parties are at cross purposes, or the contract is too vague to be interpreted. There are three important metas of agreement mistake:

• mistake as to the terms of the contract; for example, one party may read the terms of the offer as implying something different to what is really being offered;
• mistake as to subject matter; this usually means that the terms are too imprecise to evidence any meeting of minds;
• mistake as to person; this is the only common case. Here one of the parties is mistaken about the identity of the other.

It can be a job for the court to decide whether there really is an agreement mistake, which may void the contract, or one party has merely made an error of judgement and the contract is sound.

In mistake as to person, it is common for one party to make a mistake about the identity of a fraudster. Particular problems arise when a person buys goods, for example, from a fraudster and then sells them (innocently) to someone else. In general, in a true mistake as to identify the contract is void.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March 2024.