What remedy is typically available for a contract formed based on mutual mistake of fact?

In the context of contract law, when a contract is formed based on a mutual mistake of fact, one of the remedies available is rescission. Rescission refers to the cancellation or annulment of the contract, restoring the parties to their original positions as if the contract had never existed.

When both parties are mistaken about a fundamental fact that is critical to the agreement, the contract lacks the necessary mutual assent or agreement on that critical fact. For example, if two parties enter into a contract believing a particular item exists or has certain characteristics, but it turns out that the item does not exist, this mutual mistake can void the contract.

Rescission is considered an equitable remedy that recognizes the essence of fairness; it allows parties to avoid being bound by a contract that is based on faulty premises. It is important to note that rescission does not simply terminate the contract; it effectively voids it and provides a legal pathway for the parties to recover any benefits conferred under the contract if possible. Thus, in the case of a mutual mistake of fact, seeking rescission is the appropriate legal remedy.