Which statement about contracts based on a mistake is NOT correct?

The determination that a contract based on a unilateral mistake of fact may be avoided by the mistaken party is not accurate. In contract law, a unilateral mistake occurs when only one party is mistaken regarding a material fact. Generally, contracts formed under a unilateral mistake are binding on the mistaken party unless certain conditions apply, such as if the non-mistaken party knew or should have known of the mistake, or if the mistake relates to a basic assumption on which the contract was made and has a material effect on the agreed exchange.

Understanding the nature of mutual mistakes provides further clarity. Contracts based on mutual mistakes, where both parties have a misunderstanding concerning a fundamental fact, can be avoided by either party, reflecting that both parties are operating under a shared misconception. Furthermore, a mutual mistake concerning future market value does not affect the enforceability of a contract; the law recognizes that parties may misjudge future conditions without invalidating their agreement. The right to rescission as a remedy hinges on the proof of the mistake and its impact on the contract, applicable not only in unilateral cases but also in scenarios where mutual mistakes pertain to essential elements of the agreement.

Engaging with these distinctions reinforces the principles involved in contract formation and highlights how the misunderstanding of material facts