What is the difference between a bilateral and unilateral mistake?
2 Answers
In legal and contract contexts, the terms "bilateral mistake" and "unilateral mistake" refer to errors made by parties involved in a contract. Here’s a detailed explanation of each:
### **Bilateral Mistake**
- **Definition**: A bilateral mistake, also known as a mutual mistake, occurs when both parties to a contract are mistaken about a fundamental fact that is central to the agreement.
- **Characteristics**:
- Both parties share the same incorrect belief about an essential fact.
- The mistake must be about a fact that goes to the root of the contract, not just a minor detail.
- For a contract to be voidable due to a bilateral mistake, the mistake must be about something that affects the essence of the agreement.
- **Example**: If two parties enter into a contract for the sale of a painting they believe is an original work of a famous artist, but it turns out to be a forgery, both parties are mistaken about a fundamental fact (the authenticity of the painting). In this case, the contract might be voidable because both parties were misled about a crucial aspect of the agreement.
### **Unilateral Mistake**
- **Definition**: A unilateral mistake occurs when only one party is mistaken about a fact that is material to the contract. The other party is aware of the mistake or is not mistaken.
- **Characteristics**:
- Only one party is mistaken about an important fact.
- The other party either knows about the mistake or should have known about it (i.e., it’s not a mistake the other party could reasonably be expected to be unaware of).
- Unilateral mistakes do not usually void a contract unless the non-mistaken party had knowledge of the mistake or the contract was unconscionable.
- **Example**: If a buyer mistakenly believes a car is in good condition and agrees to purchase it, while the seller knows the car is actually in poor condition but doesn’t disclose this, the buyer’s mistake is unilateral. The buyer might be able to seek a remedy if they can prove that the seller knew or should have known about the buyer’s mistake.
### **Key Differences**
1. **Number of Parties Mistaken**:
- **Bilateral**: Both parties are mistaken.
- **Unilateral**: Only one party is mistaken.
2. **Impact on Contract**:
- **Bilateral**: The contract may be voidable because the mistake affects the fundamental terms of the agreement.
- **Unilateral**: The contract generally remains enforceable unless the non-mistaken party had knowledge of the mistake or the contract is deemed unjust.
3. **Remedies**:
- **Bilateral**: Typically allows for rescission of the contract since both parties are mistaken about something fundamental.
- **Unilateral**: May lead to rescission or reformation if the mistaken party can prove that the other party was aware of or should have been aware of the mistake.
In summary, the main difference lies in whether one or both parties are mistaken and how that mistake impacts the validity and enforcement of the contract.
### **Bilateral Mistake**
- **Definition**: A bilateral mistake, also known as a mutual mistake, occurs when both parties to a contract are mistaken about a fundamental fact that is central to the agreement.
- **Characteristics**:
- Both parties share the same incorrect belief about an essential fact.
- The mistake must be about a fact that goes to the root of the contract, not just a minor detail.
- For a contract to be voidable due to a bilateral mistake, the mistake must be about something that affects the essence of the agreement.
- **Example**: If two parties enter into a contract for the sale of a painting they believe is an original work of a famous artist, but it turns out to be a forgery, both parties are mistaken about a fundamental fact (the authenticity of the painting). In this case, the contract might be voidable because both parties were misled about a crucial aspect of the agreement.
### **Unilateral Mistake**
- **Definition**: A unilateral mistake occurs when only one party is mistaken about a fact that is material to the contract. The other party is aware of the mistake or is not mistaken.
- **Characteristics**:
- Only one party is mistaken about an important fact.
- The other party either knows about the mistake or should have known about it (i.e., it’s not a mistake the other party could reasonably be expected to be unaware of).
- Unilateral mistakes do not usually void a contract unless the non-mistaken party had knowledge of the mistake or the contract was unconscionable.
- **Example**: If a buyer mistakenly believes a car is in good condition and agrees to purchase it, while the seller knows the car is actually in poor condition but doesn’t disclose this, the buyer’s mistake is unilateral. The buyer might be able to seek a remedy if they can prove that the seller knew or should have known about the buyer’s mistake.
### **Key Differences**
1. **Number of Parties Mistaken**:
- **Bilateral**: Both parties are mistaken.
- **Unilateral**: Only one party is mistaken.
2. **Impact on Contract**:
- **Bilateral**: The contract may be voidable because the mistake affects the fundamental terms of the agreement.
- **Unilateral**: The contract generally remains enforceable unless the non-mistaken party had knowledge of the mistake or the contract is deemed unjust.
3. **Remedies**:
- **Bilateral**: Typically allows for rescission of the contract since both parties are mistaken about something fundamental.
- **Unilateral**: May lead to rescission or reformation if the mistaken party can prove that the other party was aware of or should have been aware of the mistake.
In summary, the main difference lies in whether one or both parties are mistaken and how that mistake impacts the validity and enforcement of the contract.