When both parties to a contract have erroneous assumptions about the same fact, it is known as a mutual mistake.
What is mutual mistake?
- When both parties to a contract are erroneous regarding the same crucial piece of information, this is known as a mutual error. They disagree with each other.
- Although the parties are in agreement, they are in error. The contract is therefore voidable. Collateral errors do not grant the right to cancel. One that "does not go to the heart" of the contract is referred to as a collateral error.
- An error made by both parties must be material in order for it to invalidate a contract.
The assumption pf risk is questioned when a significant error is made on a significant aspect of the contract or the contract's primary goal. Contractual provisions or prevailing tradition may be used to determine this risk.
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