A misunderstanding held by only one party that does not reflect the facts is known as what?

• A. Bilateral Mistake
• B. Unilateral Mistake
• C. Mistake
• D. Misunderstanding

Answer: (B)

Unilateral mistake describes a situation where only one party holds a mistaken belief about a fact in the contract. Since the other party’s understanding is correct and the error isn’t shared, the contract generally remains enforceable, unless the nonmistaken party knew about the mistake or caused it, or the mistake is purely clerical and can be corrected. This fits best because the scenario specifies a misunderstanding held by one party that does not reflect the facts. In contrast, a bilateral (mutual) mistake involves both parties sharing the same incorrect belief, which has different implications, and general terms like mistake or misunderstanding are less precise for this context.