Mistake Law and Legal Definition
A mistake is an error in understanding facts, meaning of words or the law, which causes one party or both parties to enter into a contract without understanding the responsibilities or outcomes. Such a mistake can entitle one party or both parties to a rescission (cancellation) of the contract. A mistaken understanding of the law (as distinguished from facts) by one party only is usually no basis for rescission since "ignorance of the law is no excuse."
Mistake covers a broad set of situations, and courts often distinguish between unilateral mistake and mutual mistake. A unilateral mistake is an incorrect belief of one party that is not shared by the other party. A mutual mistake is an incorrect belief shared by both parties. Courts have traditionally held that mutual mistakes are more likely than unilateral mistakes to make a contract voidable.