What happens to a contract if there is a mutual mistake regarding the existence of the subject matter?

In the context of contract law, a mutual mistake regarding the existence of the subject matter occurs when both parties are mistaken about a fundamental aspect of the contract that was essential to their agreement. As a result, if the parties entered into a contract believing that the subject matter existed and it turns out that it does not, the agreement is considered void. This is because a valid contract requires a legal subject matter; if there is no existence of the subject matter, there is nothing to bind the parties to the terms of the agreement.

When both parties are under the same incorrect assumption about a key element of the contract—like the existence of the property, goods, or service—their agreement is fundamentally undermined. Thus, the law treats the situation as if the contract never existed in the first place, rendering it void rather than merely voidable or subject to modification.