What does unilateral mistake refer to?

Unilateral mistake refers specifically to a situation in which only one party to a contract is mistaken about a material fact that is important to the contract. This kind of mistake can occur when one party believes a fact to be true while the other party is aware of the true situation. In many legal contexts, a unilateral mistake does not typically allow the mistaken party to void the contract unless the non-mistaken party knows or should have known of the mistake and did not correct it.

In this context, understanding unilateral mistakes is crucial as it underlines the differences between various types of mistakes in contract law. This concept is significant in determining the enforceability of contracts and the obligations of parties when a mistake is present—essentially focusing on the impact of one party's misunderstanding on contractual obligations.