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Unilateral Mistake in Contract

One of the more popular defenses in breach of contract cases is mistake. Mistake, for the purpose of contract law, usually refers to a factual mistake by one or more of the parties to the contract which justifies a rescission or canceling of the contract. A mistake may be either mutual or unilateral. A mutual mistake is one common to both or all parties where each work under the same misconception respecting a material fact, the terms of the agreement, or the provisions of the written instrument designed to embody such agreement. Sheinbein v. First Boston Corp., 670 S.W.2d 872, 879 (Mo. Ct. App. 1984). It must appear that both parties did what neither intended to do. Link v. Dowdy, 816 S.W.2d 927, 929 (Mo. Ct. App. 1991). Indeed, if both parties are mistaken, then there is really no contractual assent or meeting of the minds which could bind them.

A unilateral mistake, on the other hand, exists where only one party has an erroneous belief as to the facts. Landers v. Sgouros, 224 S.W.3d 651, 664 (Mo. Ct. App. 2007). Unlike with a mutual mistake, a unilateral mistake is usually not an adequate basis for voiding a contract. Indeed, the unilateral mistake must be on a vital matter so that the court could believe the parties never actually agreed to the contract. This is often a tough sell to the court because the law in Missouri shows a lack of sympathy for a claim that one party did not understand the consequences of an act; and, in general, courts are reluctant to allow one party to avoid a document for a mistake that was not shared by the other. Case law does make clear, however, that there may be relief for a unilateral mistake where (1) the effect of the mistake is such that enforcement of the contract would be unconscionable or (2) that the other party had reason to know of the mistake.

It is generally recognized that there is no relief for a mistake of the law. Rather, it is mistake of facts which can form the basis for relief. Admittedly, the distinction between a mistake of fact and a mistake of law is often quite unclear.

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