#11 · 2026-08-17 · Legal term
Mutual mistake
Under Restatement (Second) §§ 152–154, a shared mistake about a basic assumption with a material adverse effect may make a contract voidable by the adversely affected party unless that party bears the risk. The precise application is jurisdiction-specific.
Rule to remember
Mutual mistake may permit avoidance when both contracting parties share an erroneous belief about a basic assumption, materially affecting the exchange, and the adversely affected party does not bear the risk.
Key elements and checks
- Both parties share the mistaken belief when contracting.
- The belief concerns a basic assumption and materially affects the exchange.
- The party seeking avoidance did not assume or otherwise bear the risk.
In the source’s words
“both parties had the same mistaken belief”
Cornell Wex — Mistake
A one-party mistake has different requirements; a bad prediction about future value is not automatically a mistake about an existing basic assumption.