Mistake in Bid:
Unilateral Mistakes
In general, when a company enters into a contract with another commercial company or the Government, the transaction is deemed final and conclusive. When a contract is fully executed, each party has justified expectations and the law protects these expectations. In some rare, exceptional situations, however, it is possible for one of the parties to a contract to avoid this finality. If such an exceptional situation arises during contract formation, excluding routine changes after award, the contract may be avoided or reformed.
One example of such an exceptional situation is a “mistake”. A mistake in this context “is a belief that is not in accord with the facts”1 The word “mistake” refers to an erroneous belief.
A party's erroneous belief relates solely to the facts as they existed at the time the contract was executed. Consequently, a party's anticipation of certain results, or the judgment of a party to a contract, is not a mistake. “An erroneous belief as to the contents or effect of a writing that expresses the agreement is, however, a mistake.” 2
The above legal definition is different than the common dictionary definition of a mistake. The dictionary defines a "mistake" as an error or fault; a misconception or misunderstanding3. A mistake using this dictionary definition has no legal consequences.
A mistake can be either mutual or unilateral. A unilateral mistake can occur when and if “a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performance that is adverse to him [then] the contract is voidable by him if he does not bear the risk of the mistake”4. In layman's terms, if a party enters into a contract expecting the other party to perform a specification or comply with one or more terms of the contract, and this expectation is not realized because of a unilateral mistake made by one of the parties at the time the contract was formed, then it is possible, but not guaranteed, that the contract may be reformed.
