Legal Definitions - mental reservation

Definition: Mental reservation refers to one party's silent understanding or exception to the meaning of a contractual provision.

Example: Imagine you are buying a used car from a private seller. The seller tells you that the car has never been in an accident, but you notice some damage on the bumper. You decide to buy the car anyway, but you make a mental reservation that the seller may not have been completely truthful about the car's history.

Explanation: In this example, the buyer has a mental reservation about the seller's statement that the car has never been in an accident. The buyer does not express this reservation to the seller, but it is still a part of their understanding of the transaction. Mental reservations can be important in legal disputes, as they can affect how a court interprets the terms of a contract.