Legal Definitions - common mistake

A common mistake occurs in contract law when both parties to an agreement share the same mistaken belief about a fundamental fact that is central to their contract at the time it is made. This shared error relates to something essential, such as the existence of the subject matter, its identity, or a crucial quality that forms the basis of the agreement. If the mistake is significant enough, it can render the contract void or voidable, meaning it may be treated as if it never existed or can be canceled by one of the parties.

Here are some examples illustrating a common mistake:

• Example 1: Non-existent Subject Matter

  A collector agrees to purchase a specific, rare vintage automobile from a dealer. Unbeknownst to both the collector and the dealer, the car had been completely destroyed in a warehouse fire the day before the contract was signed. Both parties entered into the agreement under the mistaken belief that the unique car still existed and was available for sale.

  How this illustrates the term: This is a common mistake because both the buyer and the seller shared the same fundamental error regarding the existence of the subject matter of the contract (the car). Since the car no longer existed at the time of the agreement, the contract may be considered void.

• Example 2: Fundamental Quality of Subject Matter

  A property developer contracts to buy a large parcel of land from a landowner, with both parties genuinely believing the land contains a significant deposit of a valuable mineral, based on an outdated and unverified geological survey. The developer intends to mine the mineral, and the price reflects this potential. After the contract is signed but before the sale is finalized, a new, accurate survey reveals there are no such minerals on the property.

  How this illustrates the term: This demonstrates a common mistake because both the developer and the landowner shared the same mistaken belief about a fundamental quality of the land (the presence of valuable minerals), which was a core assumption underpinning the contract and its agreed price. The absence of these minerals fundamentally alters the nature of what was being bought and sold.

• Example 3: Identity of Subject Matter

  An art gallery sells a sculpture to a private collector, and both the gallery and the collector genuinely believe it to be an authentic piece by a renowned contemporary artist, based on what they thought was a conclusive expert appraisal. The price paid reflects its perceived authenticity. Later, it is definitively proven by a new, more advanced analysis that the sculpture is a very convincing replica, not an original work by the artist.

  How this illustrates the term: This is a common mistake because both parties were mistaken about the true identity and authenticity of the sculpture, which was a fundamental characteristic that drove the value and purpose of the transaction. Their shared error regarding its origin and authorship goes to the very essence of what they believed they were contracting for.