Mistake under Indian Contract Act, 1872

Introduction under Indian Contract Act

Mistake means wrong belief which is innocent, and leads one party to rise misunderstanding against other. Mistake happened when the terms and conditions of the agreement is not clear between the parties. When one said something and white was not clear in the mind of other. The both parties understand consequences on the different terms and there was no consensus-ad-idem i.e. meeting of mind , and thus not understanding same thing in same sense.

Mistake has been further classified into two cases under Indian Contract Act , 1872.

1. Mistake of Fact

2. Mistake of law.

Mistake of Law under Indian Contract Act

Ignorance of law is not excusable under India Contract act. It can better be explained with the help of Latin Maxim Ignorantia juris non execusat, this means any party Under contract can’t take defense that they do not know any law enforced India at that time , everyone is deemed to know the law enforce , this is covered under section 21 of contract Act, and such Contracts are not voidable on mere grounds of being unaware of laws.

For example : If any person travels in a train without tickets and on being caught by the conductor he takes defense of not being aware of the law. The man under contract law can’t take this ignorance of law as a defense and the person will be punished under sec 138 of The Indian Railways Act, 1989.

Exceptions

1. Mistake regarding foreign law.

Under section 21 of Contract Act , Mistake regarding foreign law is considered as an excuse. Because no party is supposed to know the provision and law enforced in foreign country . Hence it will be treated as a exception of this law.

For example : An Indian company was supposed to sell 200 cans of concentrated sulphuric acid containing 45% of solution to American company. Although more than 30% of solution was banned in America unknowingly to this fact the Indian company took defense of Mistake of law. It was acceptable as a defense because no one is supposed to know the laws of foreign.

2. Mistake regarding private right.

The existence of any private right is a matter of fact although depending on the rules of law because it is not ok for a party to fully know the private rights of another party.

In Cooper v Phibbs The offended party took a rent of fishery directly from the litigant unconscious of the way that he previously had an actual existence enthusiasm for the fishery right. The offended party, thusly, brought a suit for the dropping of the rent and the respondent contended this was an error of law. It was held that a mix-up concerning the general proprietorship or right stands on a similar balance as a slip-up of law and consequently was announced void.

Mistake of Fact under Indian Contract Act

Ignorance of Fact is excusable under law of Contract. Ignorantia Facit Excusat that implies ignorance of Fact is excused. Under Section 20 of Indian contract this term is explained, contract is said to be void of both the parties are under mistake of Fact.

Further it has classified as:-

1. Bilateral Mistake – Section 20

Following conditions needs to be fulfilled to apply this

1) Mistake must be mutual that is committed by both the parties

2) Is should be related to certain Fact.

3) Facts should be necessary to contract.

Since there is no consensus-ad-idem hence contract would be void.

Different kinds of bilateral mistakes

1)Regarding Subject Matter :

It happens many a time that subject on which the contract is based ceases to exists and the parties to contract are not aware of this fact. If the subject matter to contract does not persists then it means that contract has perished and is termed to be void.

In the case of Galloway Vs. Galloway the couple demanded separation after marriage but it was held that the agreement of separation is void because it was mere assumption that they were married to each other.

2) Regarding Subject matter’s quality:

If the misconception is not regarding the matter but its quality then the contract is said to be valid.

In the case of Smith Vs. Hughes, one person entered into contract of buying oats, he thought it to be old whereas it was new hence contract can’t be said to be void on the mere basis of quality.

3)Regarding the quality of subject matter.

If there is mutual mistake of regarding the quantity of the subject, then the contract is said to be void.

4)Regarding the title of the subject matter.

If one person wants to buy something of which he already is owner, but both the parties are under mutual mistake of fact. Then in this case seller does not have any right to sell and contract in itself stands void

Example: Cooper V Phibbs case.

Unilateral mistake under Indian Contract Act

When only one party is under mistake regarding subject matter to contract. This part is elaborately discussed under Section 21 of the Contract Act. However a unilateral mistake does not affect the validity of the contract and is not mere ground to set contract aside.

In the case of Tapeline Vs. Jainee.The buyer wanted to buy a land and was well versed with its measurement, he was also provided with the plan to study it further, but he declined and when he purchase a land he saw that garden area which he thought to be included in the plan was not there and hence court held that contract can’t be revoked as it was Clearly mentioned in the plan provided. And it was mere mistake of one party. Hence the contract is valid.

Exception to Unilateral Mistakes

This type of contract can be termed void only if it is proved that contract is caused by misrepresentations or fraud by one party.

1) Mistake to one party as to nature of contract.

When one party makes any mistake regarding the nature of contract and it is known by the other it is said to be void. This happens when while entering into the contract the party is misrepresented or fraudulently pushed into contract or at the time of understanding its measures the person was unable to understand due to age factor or illness.

In the case of Dulari Devi V. Janardhan An illiterate woman was made to put her thumb impression on two papers believing them to be some gift deeds to her daughter, whereas in actual the papers were regarding transfer of whole property on someone else’s name without her consent. Although here also the mistake was unilateral but as the contract initiated with element of fraud it was held to be void by the court.

2)Mistake regarding identities of the parties to the agreement.

Usually, the identity of the parties is not relevant to contract but in certain cases where one party hides his real identity and shows to be someone else by misrepresentation or fraud, who he actually is not. Then such contracts are void.

In the case of Cundy V Lindsay.Lindsay and Co. Was a reputed company selling handkerchief in the market. One person named Blenkarn misrepresented and signed on the name of very famous company named “Blenkiron & Co.” ordered 123 pieces of handkerchief. Linday assuming it to be same delivered it to Blenkarn, who further sold it to innocent Cundy. On not getting a payment by “Blenkiron & Co.” Lindon sued him. And it was held by the court that there was mistaken assumption, hence no real consent to the contract of sale.

Conclusion

The legitimacy of an agreement is obstructed when assent is increased because of a mix-up by the gatherings. As examined, an error can be of two kinds, Mistake of certainty and Mistake of law. At the point when agree to an agreement is increased because of a two-sided misstep of actuality, the agreement is said to be void yet when the slip-up happens because of a one-sided mix-up of certainty, the understanding is legitimate with the exception of in the instances of mix-up in regards to the idea of the agreement or character of the gatherings to the agreement. Correspondingly, when agree to an agreement is increased because of a slip-up of the Indian law it is a substantial agreement yet in the event that it is expected an outside law by both the gatherings, the agreement is said to be void.

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Author Details: AAYUSHI SINGH

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