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What do you
understand by mistake?
Ans. Fraud is generally defined in the law as an intentional misrepresentation of material
existing fact made by one person to another with knowledge of its falsity and for the
purpose of inducing the other person to act, and upon which the other person relies with
resulting injury or damage. Fraud may also be made by an omission or purposeful failure
to state material facts, which nondisclosure makes other statements misleading.
Misrepresentation means a false statement of fact made by one party to another party,
which has the effect of inducing that party into the contract. For example, under certain
circumstances, false statements or promises made by a seller of goods regarding the
quality or nature of the product that the seller has may constitute misrepresentation. A
finding of misrepresentation allows for a remedy of rescission and sometimes damages
depending on the type of misrepresentation.
MISTAKE
A mistake is an erroneous belief, at contracting, that certain facts are true. It may be
used as grounds to invalidate the agreement. Common law has identified two
different types of mistake in contract: "unilateral mistake" and "mutual mistake,"
sometimes called "common mistake."
A mistake is an error in understanding facts, meaning of words or the law, which causes
one party or both parties to enter into a contract without understanding the
responsibilities or outcomes. Such a mistake can entitle one party or both parties to a
rescission (cancellation) of the contract. A mistaken understanding of the law (as
distinguished from facts) by one party only is usually no basis for rescission since
"ignorance of the law is no excuse."
Mistake covers a broad set of situations, and courts often distinguish between unilateral
mistake and mutual mistake. A unilateral mistake is an incorrect belief of one party that is
not shared by the other party. A mutual mistake is an incorrect belief shared by both
parties. Courts have traditionally held that mutual mistakes are more likely than
unilateral mistakes to make a contract voidable.