The law of mistake in contracts is an important concept in contract law that distinguishes between mutual mistakes and unilateral mistakes. A mutual mistake occurs when both parties to the contract share an erroneous belief about a fundamental fact that affects the terms of the agreement. In contrast, a unilateral mistake occurs when one party to the contract is mistaken about a fundamental fact that affects the terms of the agreement.

In the case of mutual mistake, the contract is voidable by either party, meaning that either party can choose to rescind the contract and be released from their obligations under it. Generally, the party seeking rescission must establish that the mistake was material and that they would not have entered into the contract had they known the truth about the mistaken fact.

However, if the party seeking rescission knew or had reason to know of the mistake, the contract may not be voidable. Similarly, if the parties had allocated the risk of mistake in the contract, such as through a specific warranty or representation, the mistaken party may not be entitled to rescission.

In the case of unilateral mistake, the rules are generally more stringent. The mistaken party may only rescind the contract if the other party knew or had reason to know of the mistake, or if the mistake was the result of fraud or some other wrongdoing on the part of the other party. In some cases, courts may allow rescission based on unilateral mistake if the mistake was so significant that it makes the contract unconscionable or if enforcing the contract would be contrary to public policy.

It is important to note that the law of mistake does not apply to every type of mistake. For example, mistakes about future events, opinions, or predictions are generally not grounds for rescission. Similarly, mistakes about the value or quality of goods or services may not be sufficient to warrant rescission.

Overall, the law of mistake in contracts is a complex area that requires careful analysis of the specific facts and circumstances of each case. If you believe that you have entered into a contract under a mutual or unilateral mistake, it is important to seek the advice of an experienced contract attorney to ensure that your rights are protected.