Mutual Mistake

What is Mutual Mistake in Contract Law?

Quick Definition

Mutual mistake occurs when both parties to a contract are mistaken about the same fundamental fact or assumption. If the mistake is serious enough, it may prevent a true agreement from being formed. The court will assess whether there was a genuine “meeting of minds”.

In Context

Mutual mistake typically arises where both parties are operating under a shared misunderstanding, such as assuming a specific subject matter exists when it does not. In Raffles v Wichelhaus, the parties contracted for cotton expected on a ship named “Peerless”, but each had a different ship in mind, meaning there was no true consensus ad idem. Where the mistake goes to the identity or existence of the subject matter, the contract may be void from the outset. However, courts are cautious and will only find mutual mistake where the ambiguity is irreconcilable, preferring to uphold agreements where possible. In exams, the key question is whether the misunderstanding is so fundamental that no reasonable interpretation can reconcile the parties’ intentions.

See Also

• Common Mistake

• Unilateral Mistake

• Contract Formation

Learn More

Explore our Contract Law Notes for deeper case law, examples, and revision tips.