Contracts
Mutual mistake occurs in a contract when:
AOnly one party misunderstands a term
BBoth parties share a false belief about a material fact at the time of contracting✓ Correct
CThe agent makes an error in the contract
DThe parties disagree on the purchase price
Explanation
Mutual mistake is when both parties share a false assumption about a material fact at the time of contracting. Courts may void or reform a contract to reflect the parties' true intent if a mutual mistake is proven.
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