Breach, Remedies, and Defenses

Contract Mistakes

Mistakes can make the contract void or voidable, depending on the type of mistake and whether it was operative—in other words, whether it was such a serious error that the entire contract is invalid.

Certain types of mistakes can make a contract invalid. In a mutual mistake, both parties make a mistake about the same material term or terms when entering into a contract. As a result, either party may seek to get out of the contract by claiming that it is invalid. A unilateral mistake, on the other hand, happens when only one party to a contract is mistaken as to a material term of a contract, and that party seeks to get out of the contract for this reason. Some states do not permit the defense of unilateral mistake, so it is important to know the law of the state where a case is pending to determine the defenses that are available. Under this condition, a contract is not canceled unless the other party knew the mistake was made unintentionally and without negligence.

Both of these are defenses to a contract and can make a contract void or voidable. A void contract is is not legally binding because it lacks an essential element or because it is illegal or against public policy. In other words, it is not in effect, and the parties have no obligations to perform any duties related to it. A voidable contract, in contrast, is valid, but it can become void if the nonbreaching party so chooses. For example, if a minor enters into a contract, a court may consider that contract to be voidable because a minor was involved in the contract.

Impact of a Mistake on the Enforceability of a Contract

A unilateral mistake or a mutual mistake can form a defense to the enforcement of a contract and can sometimes provide adequate grounds to get out of a contract.