Condition under Mistake consent shall not be called to be free
Mistake may be described as n erroneous belief about something. A contract may be caused by mistake when both the parties to the contract do not agree to the same thing and in the same sense. Mistake might be of the following kinds:
(i) Mistake of Fact;
(ii) Mistake of Law; and
(iii) Mistake of Both the Parties.
(1) Mistake of Fact
When some mistake is related to some important fact and the mistake is not confined only to one party but is concerned with both the parties, it shall be known as the mistake of fact.
For instance, Mahesh enters into a contract for giving the ship-consignment of goods to Naresh which is expected to come from America. But before reaching, the ship had already sunk in the sea whose information was not available to either of the parties. This contract, due to the mistake of both the parties, is void.
Mistake of fact may be further classified as:
(A) Bilateral Mistake. According to Sec. 20 of the
Indian Contract Act, “Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.” Thus, the Act lays that the mistake should be bilateral and must relate to a matter of fact essential to the agreement.
Example. A agrees to sell his horse to B for a sum of Rs. 1,000. But the horse expired a day earlier of which neither A nor B had any knowledge. This agreement is based on bilateral mistake and is void.
The following two conditions must be fulfilled in order to declare an agreement void ab-initio under this section.
(i) A mistake must have been committed by both the parties – both the parties must have made a mutual mistake. A misunderstanding must exist between both the parties.
Ex Having two houses A and B, M offers to sell
house A. N, unaware that M has two houses, thinking of house B agrees to buy it. Here the agreement is void as there is no real consent.
(ii) A matter of fact essential to the agreement must be mistaken upon – it must be some fact to which the mistake must be related and not a judgment or an opinion: The fact must be such that which goes to the root of agreement. The nature of the promise in each case decides what facts are essential to an agreement.
Cases included under bilateral mistake: the mis-
takes which may be covered under bilateral mistakes on the basis of judicial decisions may be put under the following heads.
(a) Mistake as to the existence of subject matter-the contract is void if both the parties believe that the subject matter of the contract, which is not in existence, is in existence.
A agrees to buy a certain horse from B. But it
so happens that at the time of the bargain the horse was dead and neither party was aware of the fact. Such an agreement is void.
(b) Mistake as to the identity of subject
matter-the agreement is void for want of consensus-ad-idem where both parties are mistaken regarding the identity of the subject matter i.e. one party had a certain thing in mind and the other party had another.
(c) Mistake regarding the title of the subject mat-
ter- If a thing, which he is not entitled to sell, is being sold by the seller and it is under a mistake that both the parties are acting then the agreement is void.
Ex. A lease of a fishery which already belonged to him was taken by a person but it was not known to either party. The lease was thus held to be void.
(d) Mistake regarding the quality of the subject-
matter- If both the parties are mutually mistaken regarding the quality of the subject matter i.e. if the parties believe the subject matter to be different from what it is then the agreement is void.
Ex. B is in contract with A, who is to sell him a
particular horse, which is believed by both A and B to be a race horse. But later on it comes to light that it is a cart horse.The agreement is void.
(B) Unilateral Mistake. When only one party to the
contract is mistaken as to price or quality of the subject, it is a case of unilateral mistake. Sec. 22 of the Indian ContractAct says, “A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to matter of fact.” Evidently, an agreement based on unilateral mistake cannot be avoided.
Ex. A offers to sale his house to B. He intended
to offer Rs. 1,50,000 but by mistake he makes an offer in writing of Rs. 50,000. He can not refuse the contract on account of mistake.
(II) Mistake of Law
With regard to mistake of law there is a well established rule known as ‘Ignorantia juris non excusat’ i.e., ignorance of law is no excuse. A party cannot seek any relief on the plea that he was ignorant of law. Thus, a contract based on ignorance of law cannot be avoided since a person is expected to have knowledge of law of his land. However, if a person gets into a contract by presuming a law through the inducement of an other, the contract may be avoided.
Mistake of law of a foreign country is treated as a
mistake of fact and the agreement in such a case is void. To quote Sec: 21 of the Indian Contract Act, “A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact.”
Example. A steals the watch of B. On being caught.A says that he didn’t know that stealing is a punishable crime. On this basis he is not to be excused.