Unilateral Mistake

What is Unilateral Mistake in Contract Law?

Quick Definition

Unilateral mistake occurs when only one party to a contract is mistaken about a fundamental term or fact, while the other party is aware of the mistake or ought reasonably to be aware of it. In limited circumstances, this can prevent the formation of a valid contract.

In Context

Unilateral mistake is most significant where one party tries to “snap up” an offer knowing the other side has made an obvious error, particularly in pricing or identity. A contract may be void if the mistake relates to a fundamental term and the other party has actual knowledge of it, as seen in Hartog v Colin & Shields, where the court refused to enforce a contract for hare skins priced per pound instead of per piece due to an obvious pricing error. However, courts are generally reluctant to intervene, prioritising certainty in commercial dealings. If the mistake is not obvious, the contract will usually remain valid. In exams, the key issue is whether the non-mistaken party knew (or should have known) about the error at the time of agreement.

See Also

• Common Mistake

• Misrepresentation

• Offer and Acceptance

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