- Courts are cautious about undoing contracts for mistake, because doing so too easily would undermine the certainty contracts are supposed to provide.
- Common mistake happens when both parties share the same false belief about a fundamental fact at the time they contracted — for example, both believing that a specific piece of property…
- Mutual mistake happens when the parties are genuinely at cross-purposes — each has a different, incompatible understanding of an essential term, and there was never a true meeting of the…
Not every misunderstanding between contracting parties is a legal problem. Most get absorbed into the deal, sorted out through interpretation, or simply lived with. But sometimes an error is fundamental enough that it undermines whether a real agreement was ever reached at all.
Mistake in Ontario contract law is narrower than the everyday meaning of the word. It doesn't cover a bad decision, an unwise price, or ordinary buyer's remorse — it covers specific situations where both, or sometimes only one, party was wrong about something central to the deal.
This guide walks through the three recognized categories of mistake, how they differ, and what to do if you think one affects a contract you signed.
Why "Mistake" Is Narrower Than It Sounds
Courts are cautious about undoing contracts for mistake, because doing so too easily would undermine the certainty contracts are supposed to provide. The mistake generally has to go to something fundamental — not a minor detail, and not simply one side's changed mind about whether the deal was a good idea.
Common Mistake
Common mistake happens when both parties share the same false belief about a fundamental fact at the time they contracted — for example, both believing that a specific piece of property or item still existed when, unknown to either of them, it had already been destroyed. Because both sides were equally wrong about the same fundamental fact, the contract may be treated as void.
Mutual Mistake
Mutual mistake happens when the parties are genuinely at cross-purposes — each has a different, incompatible understanding of an essential term, and there was never a true meeting of the minds. Unlike common mistake, the parties are not sharing the same wrong belief; they are each wrong about what the other actually meant or intended.
Unilateral Mistake
Unilateral mistake happens when only one party is mistaken about a fundamental term, and the other party knew, or reasonably ought to have known, about that mistake and took advantage of it anyway. Because only one side needs to be genuinely mistaken, courts look closely at what the other party knew or should have realized before deciding whether the contract should stand.
Comparing the Three
| Type | Who Is Mistaken | Do They Share the Same Belief? | Typical Effect |
|---|---|---|---|
| Common Mistake | Both parties | Yes — the same false belief | Contract may be void |
| Mutual Mistake | Both parties | No — each holds a different understanding | No true agreement was ever reached |
| Unilateral Mistake | One party | No — only one is wrong, and the other should have known | Contract may be void or voidable, depending on the other side's knowledge |
What to Do If You Think a Mistake Affects Your Contract
- Pin down exactly what the mistaken fact or belief was, and whether it was genuinely fundamental to the deal — not just a detail you would now prefer were different.
- Work out which category fits: did both sides share the mistaken belief, did each side misunderstand a different term, or were you the only one mistaken?
- Gather any evidence of what the other party knew, or should have known, especially if you are arguing unilateral mistake.
- Act promptly. Raising the issue as soon as you discover it puts you in a stronger position than continuing to perform under the contract for months and raising it later.
- Get legal advice before assuming a mistake automatically voids the deal — the categories are technical, and the outcome depends heavily on the specific facts and evidence available.
Frequently asked questions
If I just made a bad decision, is that a mistake I can undo?
No. A poor business decision, an unwise price, or ordinary buyer's remorse is not a legal mistake. The doctrine requires an error about a fundamental fact or term, not simply regret about how the deal turned out.
Can a mistake about the value of something void a contract?
Generally no, on its own. Being wrong about how much something is worth is usually treated as an ordinary commercial risk each party takes on, not a fundamental mistake — unless it is tied to a deeper mistaken fact about what was actually being bought or sold.
What's the difference between mistake and misrepresentation?
Mistake involves an error that isn't necessarily caused by anything the other party said or did. Misrepresentation involves a false statement made by the other party that induced you to sign. The two can sometimes overlap, but they are legally distinct grounds.
Is it worth getting a contract reviewed before signing to avoid this?
Often yes — a careful review before signing costs far less than trying to unwind a signed deal afterward. See our flat-fee pricing for what a contract review typically involves.
This is a litigation question
Start a file online — flat, published fees, reviewed by a licensed Ontario lawyer before a dollar is owed.