A unilateral mistake occurs when only one party in a contract is mistaken about a material fact, and the other party is not aware of the mistake. This can lead to situations where one person is bound by a contract that they didn't fully understand or intended to agree to. Here's an example:
Example:
Imagine a person, Alice, buys a painting from Bob for $500. Alice thinks that the painting is an original work by a famous artist, but Bob knows it's a reproduction. Alice mistakenly believes sheβs buying an expensive original, while Bob doesnβt correct her.
In this case, Alice made a
unilateral mistake because she misunderstood the nature of the painting, but Bob did not make the same mistake. If Alice discovers the mistake, she might be able to claim that the contract should be voided, depending on the circumstances, such as whether Bob intentionally concealed the truth.
A unilateral mistake typically doesn't allow for easy cancellation of the contract, unless it was caused by fraud or misrepresentation.