MBE Rules · Contracts
Mistake — mutual
The rule
A contract is voidable by the adversely affected party if both parties were mistaken at the time of contracting about a basic assumption on which the contract was made, the mistake has a material effect on the agreed exchange, AND the adversely affected party did not bear the risk of the mistake.
In plain English
If both parties make the same wrong assumption about something important in a contract, the person who is hurt by it can cancel the deal, unless they agreed to take on that risk.
Worked example
The buyer and seller both thought a painting was an original, but it was a replica. The buyer can cancel the purchase because both were wrong about a key fact.
Memory hook
Mutual Mistake: Two to Tango. Both parties must err on a basic fact, causing a material misstep.
The trap
Students think: Any mistake voids a contract. Wrong, because the mistake must be mutual and material, without risk assumed. The actual test is both parties mistaken on a basic assumption.
How examiners test it
The MBE loves: both parties misinterpret a key fact (e.g., value of an item). Trap: One party bore the risk of mistake, so contract stands. Look for 'as is' clauses or assumed risk.
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