Mistake in Contract: A Map of Possible Cases

Giovanni Tuzet (Bocconi)

Abstract

When a contract mistake affects one party only, it is called “unilateral”; when it affects both parties, it is “bilateral” (or “mutual”). Bilateral mistakes constitute a lesser concern to jurists, for there is a consensus that they make the contract void or voidable. Unilateral mistakes are more problematic instead, since their legal consequences are controversial, together with the conditions upon which a disclosure rule is appropriate and should be enforced. To address this, economic analysis has focused on a couple of distinctions: the first is between productive and redistributive information; the second is between deliberate search and casual acquisition of information. The purpose of this work is to map the possibilities that that double distinction generates.

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