Exception occurs when the nonmistaken party knew or had reason to know of the mistake by the other party. Mutual mistake of fact - when both parties make a material mistake, the contract will not be enforced. Unilateral and mutual mistakes of law do not cause the contract to become unenforceable because both parties are presumed to know what the law is. Ignorance of the law is no excuse. Lack of capacity.
Definition requires both of the following.
Understanding that you are making a contract. Understanding basically what the contract provides for. Instances of lack of capacity. Minors - persons under eighteen years of age. Intoxicated - look to the definition of capacity, but beware that courts are fairly strict with voluntary intoxication, i.e. voluntary incapacity.