Mistake (contract Law)

Mistake (contract Law)

In contract law, a mistake is an erroneous belief, at contracting, that certain facts are true. It can be argued as a defence, and if raised successfully can lead to the agreement in question being found void ab initio or voidable, or alternatively an equitable remedy may be provided by the courts. Common law has identified three different types of mistake in contract: the 'unilateral mistake', the 'mutual mistake' and the 'common mistake'. The distinction between the 'common mistake' and the 'mutual mistake' is important.

Mistake can be- (1)Mistake of Law (2)Mistake of Fact

Mistake of law: when a party enters into a contract, without the knowledge of the law in the country, the contract is affected by such mistakes but it is not void. A contract is not voidable because it was caused by a mistake as to any law in force in India. The reason here is that ignorance of law is not an excuse at all. However if a party is induced to enter into a contract by the mistake of law then such a contract is not valid. Illustration 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.

Mistake of Fact: Where both the parties into an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. Explanation: 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.

Illustration: (1) A agrees to buy a certain horse from B. It turns out that the horse was dead at the time of bargain, through neither party was aware of the fact. The agreement is void. (2) A, being entitled to an estate for the life to B, agrees to sell it to C. B was dead at the time of an agreement, but both the parties were ignorant of the fact. The agreement is void.