Contracts: mistakes affecting formation and terms

by Practical Law Commercial

This Practice note explores the legal position of a party who has made a mistake when entering into a contract and explains the complex remedies available under English law for different types of contractual mistakes. It covers situations where a mistake has no legal impact and where it may make a contract voidable, such as in cases of misrepresentation. The note examines how courts can correct errors through contract interpretation or the equitable remedy of rectification. It also details the very strict conditions under which a contract may be void for a common mistake, referencing key case law. It also provides guidance on mistakes relating to contract formation, including uncertainty of terms and discusses the consequences when one party knowingly takes advantage of another's error during negotiations. This note does not deal with mistaken payments.