151 Mistakes We all make mistakes, so it is not surprising that mistakes are made when contracts are formed. In certain circumstances, contract law allows a contract to be avoided on the basis of mistake. It is important to distinguish between mistakes offset and mistakes ofvaiue or quality. Only a mistake of fact makes a contract voidable. Also, the mistake must involve some material facta fact that a reasonable person would consider important when determining his or her course of action. Mistakes of fact occur in two formsbilateral and unilateral. A unilateral mistake is made by only one of the parties. A bilateral, or mutual, mistake is made by both of the contracting parties. We look next at these two types of mistakes and illustrate them graphically in Exhibit 151. Exhibit 15-1 Mistakes of Fact + BILATERAL MISTAKE Contract Can Be Rescinded Both parties mistaken by Either Party MATERIAL MISTAKE OF FACT Contract Enforceable Unless- . Other party knew or should have known that UNILATERAL MISTAKE mistake was made or One party mistaken . Mistake was due to substantial mathematical error, made inadvertently and without gross negligence