What situation is described as a unilateral mistake?

A unilateral mistake occurs when only one party to a contract is mistaken about a fundamental aspect of the agreement. This scenario can affect the binding nature of the contract but does not automatically invalidate it, unless the mistake is significant enough to warrant legal action. In the context of option B, the situation where only one party misinterprets the contract aligns perfectly with the definition of a unilateral mistake, as it highlights the isolation of the misunderstanding to a single party.

In contrast, when both parties misinterpret a contract term, it results in a mutual mistake, which is fundamentally different as it implies that neither party has a correct understanding of the contract's meaning. The option regarding a party having no knowledge of the contract does not describe a mistake in interpretation but rather a lack of awareness of existence. Finally, signing a contract under duress involves coercion rather than a misunderstanding of the terms, therefore, it pertains to the nature of consent rather than a mistake about the contract itself.