Legal Definitions - collateral mistake

A collateral mistake occurs when one or both parties to a contract make an error regarding a secondary or incidental fact related to the agreement, rather than a fundamental or essential term of the contract itself. Unlike a mistake about a core element of the deal, a collateral mistake typically does not provide grounds to cancel or void the contract. The agreement remains legally binding despite the error concerning the less important detail.

Here are some examples to illustrate this concept:

• Example 1: Real Estate Purchase

  A buyer agrees to purchase a house, believing it is located in a specific school district based on a general online search. The purchase agreement clearly identifies the property by its address and legal description, but makes no mention of school districts. After closing, the buyer discovers the house is actually in an adjacent school district. This is a collateral mistake because the contract was for the purchase of the specific property itself, not for its inclusion in a particular school district. While the school district might have influenced the buyer's decision, it was not an explicit, essential term of the signed purchase agreement, and the house itself remains the subject of the contract.

• Example 2: Antique Furniture Sale

  A collector buys an antique desk from a dealer. The collector believes, based on the dealer's general description of their inventory, that the desk is made of solid mahogany. The sales contract only describes the item as an "antique writing desk, circa 1920s" and specifies the price. Later, the collector discovers the desk is actually made of a high-quality mahogany veneer over a different wood. This is a collateral mistake. The contract was for the specific antique desk as described, not for the precise composition of its wood, which was a secondary characteristic not explicitly guaranteed or made a condition of the sale. The desk is still an antique writing desk from the specified era.

• Example 3: Software Development Contract

  A small business hires a software developer to create a custom inventory management system. The business owner assumes the developer will use a popular, well-known programming language (e.g., Python) because it's widely used. The contract, however, only specifies the functionalities of the inventory system, the delivery timeline, and the cost, without mentioning the specific programming language to be used. The developer delivers a fully functional system built using a different, equally effective programming language (e.g., Ruby). This is a collateral mistake. The core of the contract was the delivery of a working inventory system with agreed-upon features, not the underlying programming language, which is a technical detail secondary to the system's functionality and performance.