Skip to main content

MISTAKE under Indian Contract Act

 MISTAKE [Sec. 20,21,22]


Mistake may be defined as an erroneous belief concerning something. It may be of two kinds:

1. Mistake of law.

2. Mistake of fact.


Mistake of Law


Mistake of law may be of two types:

1. Mistake of law of the country; - Everyone is deemed to be conversant with the law of his

country, and hence the maxim “ignorance of law is no excuse.” Mistake of law, therefore, is

no excuse and it does not give right to the parties to avoid the contract. Stating the effect of

mistake as to law, Section 21 declares that “a contract is not voidable because it was caused

by a mistake as to any law in force in India.” Accordingly, no relief can be granted on the

ground of mistake of law of the country. Illustration: - (Sec. 21). A and B make a contract

grounded on the erroneous belief that a particular debt is barred by the Indian Law of

Limitation; the contract is not voidable (i.e., the contract is valid).

2. Mistake of foreign law. -Mistake of foreign law stands on the same footing as the

‘mistake of fact’. Here the agreement is void in case of ‘bilateral mistake’ only, as explained

under the subsequent heading.


Mistake of Fact


Mistake of fact may be of two types:

1. Bilateral mistake; - Where the parties to an agreement misunderstood each other and are

at cross purposes, there is a bilateral mistake.

The following three conditions must be fulfilled:

(i) Both the parties must be under a mistake i.e., the mistake must be mutual. Both the parties

should misunderstand each other so as to nullify consent. Illustration: M, having two houses

A and B, offers to sell house A, and N not knowing that M has two houses, thinks of house B

and agrees to buy it. Here there is no real consent and the agreement is void.

(ii) Mistake must relate to some fact and not to judgment or opinion etc. An erroneous

opinion as to the value of the thing which forms the subject-matter of the agreement is not to

be deemed a mistake as to a matter of fact (Explanation to Section 20).


Illustration: If A buys a motorcar, thinking that it is worth Rs 80,000, and pays Rs. 80,000

for it, when it is only worth Rs 40,000, the contract remains good. A has to blame himself for

his ignorance of the true value of the motorcar and he cannot avoid the contract on the ground

of mistake.

(iii) The fact must be essential to the agreement i.e., the fact must be such which goes to the

very root of the agreement.

2. Unilateral mistake. Where only one of the contracting parties is mistaken as to a matter of

fact, the mistake is a unilateral mistake. Regarding the effect of unilateral mistake on the

validity of a contract. Section 22 provides that “a contract is not voidable merely because it

was caused by one of the parties to it being under a mistake as to a matter of fact.”

Accordingly, in case of unilateral mistake a contract remains valid unless the mistake is

caused by misrepresentation or fraud, in which case the contract is voidable at the option of

aggrieved party. On the basis of judicial decisions, however, in certain exceptional cases even

an unilateral mistake, whether caused by fraud, misrepresentation, etc., or otherwise, may

make an agreement void ab-initio.

Comments

Popular posts from this blog

Concept of constitutionalism

  Concept of constitutionalism Who Started Constitutionalism? John Locke - The English Bill of Rights is a foundational constitutional document that helped inspire the American Bill of Rights. Political theorist  John Locke  played a huge role in cementing the philosophy of constitutionalism.  Constitution is a written law which describes the structure of Government, the rules according to which the Govt. must work and the boundaries within which the Govt. must work. Constitutionalism   can be defined as the doctrine that governs the legitimacy of government action, and it implies something far more important than the idea of legality that requires official conduct to be in accordance with pre-fixed legal rules. Constitution constitution is the document that contains the basic and fundamental law of the nation, setting out the organization of the government and the principles of the society. Basic norm (or law) of the state; System of integration and organi...

business tips

1. Have a clear vision for your business and strive to achieve it. 2. Hire great people and give them ownership in the company. 3. Provide excellent customer service. 4. Establish yourself as an expert in your field. 5. Develop relationships with key suppliers, customers, and partners. 6. Keep track of your finances and invest in marketing and innovation. 7. Utilize digital platforms to reach a larger audience. 8. Take calculated risks and back yourself. 9. Continuously strive to improve your products and services. 10. Make customer satisfaction your priority.

Effects of Non-Registration

 Effects of Non-Registration The Companies Act, 2013 evidently highlights that the main essential for any organization to turn into a company is to get itself registered. A company cannot come into existence until it gets registered. But no such obligation has been imposed for firms by the Indian Partnership Act, 1932. If a firm is not registered it does not cease to be called as a firm, it still exists in the eyes law. Certainly, such a big advantage is not absolute but is subjected to a lot of limitations which we will study further. Non-registration of a firm simply means that the business skips the formalities of incorporation and ceases to exist in the eyes of the law. section 58 of the Indian Partnership Act, 1932 deals with the procedure of incorporation. Likewise, the meaning of non-registration is the exact opposite of registration, meaning when a firm does not go through the procedure of incorporation or start carrying on activities without getting registered. Effects of ...