1. Mutual mistake: If both parties have the same mistaken belief, the mistake is said to be "mutual."

2. Unilateral: By contrast, if only one party has the mistaken belief, the mistake is "unilateral."

3. Existing fact: The doctrines applicable to mistake apply only to a mistaken belief about an existing fact, not an erroneous belief about what will happen in the future. (Example: If Buyer and Seller both think that a stone is an emerald when it is in fact a topaz, this is a mistake. But if Buyer and Seller both think that the price of oil will remain relatively stable over the next five years, and in fact it goes up by 50% per year, this is not a mistake, since it does not relate to existing fact.)

4. Mistake of law: A mistake about a legal principle, according to most courts today, can be a mistake.

1. Basic assumption: The mistake must concern a basic assumption on which the contract was made. (Examples: The belief that a violin is a Stradavarius when it is in fact a worthless 20th century imitation is a "basic" mistake. But the seller's belief that a buyer to whom he is selling on credit is credit-worthy is probably a "collateral" rather than a "basic" mistake.)

2. Material effect: The mistake must have a material effect on the "agreed exchange of performance." (Example: If both Buyer and Seller thinks that a violin is a Stradavarius, but it is in fact a Guarnarius worth almost the same amount, the mistake would not have a "material effect" on the agreed exchange.)

3. Risk: The adversely-affected party (the one seeking to avoid the contract) must not be the one on whom the contract has implicitly imposed the risk of the mistake. Often, the contract does not make it clear which party is to bear the risk of a certain type of mistake, so the court allocates this risk in the manner that it finds to be "reasonable" in the circumstances.

1. Market conditions: Mistakes as to market conditions will generally not be "basic" ones, so the mistaken party will not be able to avoid the contract. (Example: Seller agrees to sell Blackacre to Buyer. Both parties believe that comparable land is worth $5,000 per acre. Buyer can't avoid the contract if comparable land is really worth $2,000 per acre.)

2. Existence of subject matter: The existence of the subject matter of the contract is usually a "basic" assumption. (Example: Seller agrees to sell land containing timber to Buyer. Both parties believe that there are 100,000 board feet on the property. In fact, fire has destroyed much of the timber, so that only 20,000 feet remain. This will be a basic assumption, so Buyer can avoid the contract when the facts emerge, whether this is before or after closing.)

3. Quality of subject matter: A major mistake as to the quality of the contract's subject matter is often a "basic" assumption, so the disadvantaged party can avoid the contract. (Example: If both parties believe a violin is a Stradavarius when in fact it is an almost worthless imitation, this will be a mistake on a basic assumption, and Buyer can avoid the contract.)

4. Minerals in land: In land-sale contracts, the Seller will almost always bear the risk that valuable oil and gas deposits will be found on the land (i.e., Seller cannot avoid the contract when such a discovery is made).

5. Building conditions: When a builder contracts to construct a building on land owned by the other party, the builder will almost always be found to bear the risk of a mistake about soil or other unexpected conditions, so he cannot avoid the contract if construction proves much more difficult than expected.

1. Unconscionability: The mistake is such that enforcement of the contract would be unconscionable; or

2. Reason to know: The other party had reason to know of the mistake, or the other party's fault caused the mistake.

1. Unconscionability: The mistaken contractor will succeed in showing unconscionability only if he shows that not only will he be severely harmed if forced to perform, but also that the other party has not relied on the bid. (Example: Sub-contractor gives contractor a bid of $50,000 for electrical work. Contractor relies on this bid to prepare his own master bid for the entire project. Contractor gets the contract, enters into a sub-contract with Sub-contractor, and Sub-contractor then discovers that his $50,000 bid should have been $75,000, due to a clerical error. The court would probably not find it unconscionable to hold Sub-contractor to the contract, because Contractor has relied on the $50,000 sub-bid.)

2. "Snapping up" of offer: Alternatively, the mistaken contractor may try to show that the other party either knew or had reason to know of the error. (Example: On the above example, if Sub-contractor can show that Contractor should have known that there probably was a mistake, because Sub-contractor's bid was much lower than all other sub-bids, the court is likely to let Sub-contractor avoid the contract based on unilateral mistake.)

1. Failure to read writing: But if the mistake stems from a party's failure to read the contract, he will not normally be entitled to rescind.

1. Avoidance: The most common remedy is avoidance of the contract (sometimes called "rescission"). Here, the court treats the contract as if it has never been made, and attempts to return each party to the position he was in just before the contract was signed. (Generally, restitution will be ordered — each party will return the benefits he has received from the other.)

2. Reliance: Alternatively, the court may award reliance damages, especially where restitution/ avoidance would not work because one party has suffered loses but the other has not received benefits.