Dictionary

  • Unilateral mistake (in the context of contracts)

    A mistake on the part of one party entering into a contract, of which the other party was not aware. A unilateral mistake is one of four recognised forms of contractual mistake at common law (the others being mutual mistake, common mistake, and non est factum) and is the most common.

    A unilateral mistake may be with regard to any aspect of the contract; such as the subject, date, quantity, or price.

    On one view, such a contract will always be void at law for lack of true consensus ad idem (meeting of the minds).

    On another view, as consensus appears to have been reached, the contract may be merely voidable as an instance of unconscionable dealing.

    In practice, common law will rarely provide a remedy for unilateral mistake. Where it does, the court may decide to declare the contract void ab initio and unenforceable.

    Equity however will intervene more frequently, but only where there is some ‘improper conduct’ on the part of the unmistaken party in regards to the mistake and its detection. The relevant remedy for a unilateral mistake (where it is actionable) is rescission or rectification.

    In the case of Taylor v Johnson (1983) 151 CLR 422, a unilateral mistake as to price gave rise to the judgment that the mistaken party will only be entitled to equitable rescission (rendering the contract voidable) if the other party has acted in an unconscionable way.

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