mutual mistake

A mutual mistake occurs when both parties in a contract have a shared misunderstanding about a fundamental fact essential to the agreement. This could involve incorrect information about the subject matter, such as the value of an item or its condition. Because both parties are operating under the same mistaken belief, they may seek to correct or void the contract. In legal terms, addressing a mutual mistake can lead to rescinding the contract since the parties' intentions were based on inaccurate information. Such mistakes highlight the importance of clear communication and accurate representations in agreements.