An agreement is not binding when:
A) one party makes a mistake regarding a material fact but the mistake is unknown to the other contracting party.
B) both parties make a mistake regarding a material fact.
C) one party makes a mistake of law.
D) both parties make a mistake in judgment.

Question

Quizplus · Accepted Answer

When both parties make a mistake regarding a material fact, it means that there was no mutual assent or meeting of the minds, which is a fundamental requirement for a binding agreement. As a result, the agreement is not enforceable. The other options are not necessarily sufficient to render an agreement unenforceable. A party's mistaken belief about a material fact may be grounds for rescission of the agreement, but the other party would need to have known about the mistake or acted in bad faith. Mistakes in law or judgment do not necessarily invalidate an agreement, as parties are assumed to have knowledge of the law and are free to make their own decisions.

An Agreement Is Not Binding When