Define: Common Mistake

Common mistake, in legal terms, refers to a situation where both parties to a contract are mistaken about the same fundamental fact, rendering the contract voidable. This type of mistake occurs when both parties share a misunderstanding or erroneous belief regarding a key aspect of the contract, such as the subject matter, existence of a material fact, or legal interpretation. Common mistake may arise due to mutual oversight, misinformation, or a change in circumstances that invalidates the basis of the contract. When a common mistake is discovered, either party may seek to rescind the contract, undoing the legal obligations and restoring the parties to their pre-contractual positions. However, certain conditions must be met for a contract to be voidable due to common mistake, including demonstrating that the mistake was significant enough to affect the essence of the contract and that the mistake was made by both parties without negligence or fault.

A common mistake occurs when a contract is formed and appears valid, and yet the situation that obtains in the real world makes the contract meaningless. For example, if two people enter into an agreement to transport goods using a particular ship, and the ship had sunk before the contract was settled, then the contract is meaningless. In this case, no party is in breach of contract, even if one of them was the owner of the ship. This should be contrasted with Agreement mistake, in which the parties have no real ‘meeting of minds’

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.