What is a unilateral mistake in contract law?

A unilateral mistake occurs when only one party in a contract misunderstands or is mistaken about a key fact related to the agreement. This can happen when the mistaken party is not aware of the other party's understanding of the facts or the terms of the contract. It highlights the idea that the contract is still valid unless the non-mistaken party knew or should have known about the mistake, and the mistaken party is often limited in their recourse to void the contract.

The other choices, while touching on aspects of mistakes within contracts, do not correctly define unilateral mistake. When both parties misunderstand contract facts, it pertains to a mutual mistake rather than a unilateral one. A mistake made during contract negotiation could refer to various misunderstandings but does not specifically capture the essence of a unilateral mistake. Similarly, an assertion that all parties have agreed to terms incorrectly would denote a mutual misunderstanding rather than a situation where only one party is mistaken. These elements are critical to understanding why the definition of unilateral mistake focuses solely on the perspective of the single mistaken party.