Which of the following statements is true about errors in understanding regarding contracts?

In the context of contract law, an error in understanding—often referred to as a mistake—can significantly affect the validity of a contract. When parties to a contract enter into an agreement based on a misunderstanding of key facts or terms, this error can undermine the mutual consent required for a valid contract.

If a fundamental mistake exists, it can render the contract voidable or even void, depending on the nature of the misunderstanding. For example, if both parties agree on the sale of a specific item but have different understandings of what item is being sold, this fundamental discrepancy indicates that there was no true meeting of the minds, a necessary condition for a valid contract.

Recognizing contracts' reliance on informed agreements, courts often allow for certain mistakes to lead to the annulment of the contract to promote fairness and justice. Therefore, the idea that errors in understanding can invalidate a contract is rooted in the principle that genuine assent is critical for contract enforceability.