MISTAKE
A
mistake of fact prevents the formation of a contract as there cannot
be agreement between the parties. The contract is void
ab
initio.
However in practice it is not easy for a contracting party to avoid a
contract through mistake because of problems of proof, whether or not
a third party may be injured and
caveat
emptor.
A
contract may be avoided where there is a common
mistake
depending on the circumstances and expertise of the parties. A
contract may be avoided through a mutual
mistake
which
is a question of interpretation and the application of the reasonable
person test.
However,
for a
unilateral
mistake
the
contract can only be avoided where the other party was aware that the
innocent party was mistaken and the mistake goes to the root of the
contract. This may be
fraudulent
misrepresentation.