Common use of Unilateral Mistake Clause in Contracts

Unilateral Mistake. In mutual mistake cases, both parties are operating under the same misperception as to material facts.127 In unilateral mistake cases, only one party has an erroneous perception as to the facts.128 In order to avoid a contract on the grounds of unilateral mistake, the adversely affected party must show the requirements necessary for mutual mistake. In addition, the adversely affected party must also show either that the effect of the mistake would make enforcement of the contract unconscionable or that the other party had reason to know of the mistake, or caused the mistake.129 If the doctrinal distinction between unilateral and mutual mistake is weak, the factual distinction is sometimes imperceptible.130 Not surprisingly, avoiding parties often seem confused about whether they should claim mutual or unilateral mistake, as the same facts often give rise to claims for both defenses.131 Courts generally have been reluctant to allow avoidance in cases where parties have sought relief on the grounds of unilateral mistake.132 Typically, successful cases have involved technical or computational errors.133 For example, in ▇.▇. ▇▇▇▇▇▇ Construction Co. v. City of Los 126. See id. at 455 (majority opinion).