Mistake

The law upholds contracts even when one party is mistaken unless the mistake falls within a limited set of circumstances. Mistakes generally do not invalidate contracts unless they are fundamental and affect the agreement’s very basis. Contracts involve risk allocation, and parties are bound even if their assumptions later prove erroneous. Most mistakes, such as private misapprehensions, are insufficient to void a contract unless a reasonable observer would conclude that no agreement existed.

Mistakes can be classified into common, mutual, or unilateral categories. A common mistake occurs when both parties share a false fundamental assumption about the contract’s subject, such as the non-existence of the goods. A mutual mistake involves parties misunderstanding each other’s intentions, potentially resulting in no contract if the parties are at cross purposes. A unilateral mistake arises when one party is mistaken about a fundamental matter, and the other party knows and exploits it, potentially invalidating the contract.

The defence of non est factum applies narrowly, excusing a signer who was fundamentally mistaken about the nature, not the content, of a document. It is primarily available to those with disabilities or where deception has occurred. Negligence in signing generally precludes its use. These principles aim to balance fairness with the need for certainty in contractual relationships.

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