Mutual mistake about a material fact can render a contract voidable. True or false?

• A. True
• B. False
• C. Only if both parties possess legal capacity
• D. Only if there is a breach of contract

Answer: (A)

Mutual mistake about a material fact undermines genuine agreement. If both parties share the same mistaken belief about a fact that is essential to the contract, their consent is based on an incorrect premise, so the agreement can be rescinded. The mistake must concern a fact that would have affected the decision to enter the contract and must exist at the time the contract was formed. If the contract assigns the risk of such a mistake to one party in advance, rescission may not be available. This ground is about mistaken beliefs, not about capacity or a breach occurring later.