Preface
Mistake in a contract is of two kinds. It may be a mistake of fact or a mistake of law. In both cases, the contract will become void.
Relevant Provisions
Sections 45-53 except 48 of the Contract Act, of 1872 deal with the mistake.
Meaning of Mistake
Any intentional act or omission or error arising from ignorance, surprise, imposition, or misplaced confidence falls in the meaning of mistake.
Kinds of Mistake
There are two kinds of mistakes. They are as follows.
1) Mistake of Fact
2) Mistake of Law
1) MISTAKE OF FACT
A mistake of fact is an unconscious ignorance or forgetfulness of a fact that is either in the past or present, material to the contract.
A) Bilateral Mistake
Section 20 defines the bilateral kind of mistake in a contract as follows
When both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.
Example: ‘A’ enters into an agreement with ‘B’ to sell his car which both parties believe to be in ‘A’s garage. Actually, the car was destroyed by fire an hour before the agreement was made. Since this fact was not known to both parties, the agreement is void.
Instances of Bilateral Mistakes
Following are some instances, that may lead to a contract void.
i) Existence of Subject Matter
The parties may be at mistake as to the existence of the subject matter. If both parties believe the subject matter of the contract to be in existence at the time of the contract, but in fact, it is not existent, there is no contract.
ii) Identity of Subject Matter
It arises when there is a mutual mistake as to the identity of the subject matter of the contract. In other words, one party intends to deal with one thing while the other intends to deal with another thing, there is no consensus ad item and therefore, there is no contract.
iii) Ownership of the Subject Matter
If a person agrees to purchase the property which already belongs to him but both parties are not aware of this fact the agreement is void.
iv) Quality of Subject Matter
When both parties are under a mistake regarding the quality of the subject matter, the agreement is void.
v) Mistake of Fact Essential to the Agreement
When both parties are under a mistake regarding a fact essential to the agreement, the agreement is void.
B) Unilateral Mistake
Section 22 deals with the unilateral kind of mistake as follows.
When in a contract only one of the parties is at a mistake, it is called a unilateral mistake.
i) Valid Contract
If a person due to his own negligence or carelessness makes a wrong contract, he must blame himself and cannot avoid the contract A unilateral mistake has no effect on the contract and the contract remains valid.
ii) Voidable Contract
If the unilateral mistake is caused by fraud or misrepresentation etc. on the part of the other party, the contract is voidable by the injured party.
iii) Void Agreement
An agreement will be void in the following circumstances although there is a unilateral mistake. These circumstances are as follows;
Identity of Contracting Party: Where the identity of the contracting party is essential to the contract, the mistake about the identity of the contracting party makes the agreement void
A mistake regarding the Nature of the Contract: Where one of the parties to a contract, without any fault of his own, is made to commit a mistake as to the nature of the contract, the agreement.
2) MISTAKE OF LAW
Mistake of law also affects the contract. Following are the effects of mistakes of law.
(a) Mistake of Pakistani Law
Where the parties to an agreement make a mistake in the law of the country to which they belong, the contract is binding because everyone is supposed to know the law of his own country. There is also a maxim in this regard e ignorance of the law is no excuse. Therefore as provided in Section 21 of the Contract Act 1872, a contract is not voidable merely because it was caused by a mistake as to any law in force in Pakistan.
(b) Mistake of Foreign law
A mistake as to a law not in force in Pakistan has the same effect as the mistake of fact. The foreign country requires to be proved in Pakistani courts as ordinary facts and so such a mistake makes the contract void.
(c) Mistake of Private right
A mistake of private rights is considered a mistake of fact and excusable. If a contract is made in ignorance of private nights, it would be void.
Final Marks
It is concluded that if a party agreed to enter into a contract because of a mistake, the contract will become void. There is no consensus ad idem, no real agreement if one party enters into a contract believing that certain facts important to the contract, are different from what actually exists.
REFERENCES
- The Contract Act, 1872
- N-Series by M.A. Chaudhary
- Law of Contract by Avtar Singh
