Introduction to Mistake
Section 21 of Indian Contract Act, 1872 defines ‘Effect of mistake as to law’ as follows “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. This can be well understood with an illustration below.
- 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.’
As to mistake of general law, every person is deemed to be conversant with the law of land and a person cannot plead that he was ignorant of the law he is governed by. Ignorantia juris non excusat i.e, ignorance of law is no excuse.
Section 20 of Indian Contract Act, 1872 defines this as follows: “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.” This can be well understood by the illustrations below:
- A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay. It turns out that, before the day of the bargain the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of these facts. The agreement is void.
- A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void.
- A, being entitled to an estate for the life of B, agrees to sell it to C, B was dead at the time of agreement, but both parties were ignorant of the fact. The agreement is void.
Section 20 will come into play:
- When both the parties to an agreement are mistaken,
- Their mistake is as to a matter of fact, and
- The fact about which they are mistaken is essential to the agreement.
- When parties are really agreed but their written contract does not correctly express what they intended, the mistake is not in the consensus of minds but only in the expression. Salmond calls this error in verbis.
By – Sharadha Arora
(Editor @ Legal Bites)