Mistake (Error in Intent)

Plain-language explanation

Article 95 of the Civil Code allows a person to cancel (rescind) a statement of intent—such as agreeing to a contract—if it was based on a "mistake" (錯誤) that is material to the purpose of the transaction and to common business sense. There are two types of mistake covered: (1) a mistake where what was actually expressed doesn't match what the person truly intended (e.g., writing "$1 million" when you meant "$100,000"), and (2) a mistake about an underlying fact or assumption that motivated the transaction (e.g., buying property believing it had a certain zoning status, when it didn't). For the second type, rescission is only allowed if that underlying assumption was actually communicated to the other party at the time—simply holding a private, undisclosed belief is not enough.

A key limitation is that if the mistaken party was grossly negligent, they generally cannot rescind—unless the other party knew about the mistake (or was grossly negligent in not knowing), or the other party made the exact same mistake themselves. Additionally, cancellation cannot be asserted against a third party who acted in good faith and without negligence, meaning if someone downstream acquired rights relying on the original transaction without knowing about the mistake, that third party is protected, preserving transactional security.

In business practice, this article commonly comes up with typos or errors in contract prices, quantities, or described goods, and with mistaken assumptions in M&A or real estate deals—such as misunderstanding a target company's profitability, undisclosed liabilities, or a property's actual condition or size. The critical practical takeaway: the mistake must be "material," and for assumption-based mistakes, you should document that the assumption was clearly communicated to the counterparty before or during contract formation, since this is essential to later prove a valid basis for rescission.

日本語での解説

Common scenarios

• ▸契約書に金額や数量を誤記してしまい、その錯誤に気づいた後に契約を取り消したいケース
• ▸不動産取引で、買主が『この土地は建築可能』と誤認して購入したが、実は建築制限があったケース
• ▸M&Aで買収対象会社の簿外債務や収益性について誤った前提で株式譲渡契約を締結したケース
• ▸従業員が給与や退職金の計算根拠を誤解して合意書にサインしたケース
• ▸仕入先との取引で、商品の仕様や品質について事前に伝えていた前提が実際と異なっていたケース