Tuesday, May 28, 2024

𝗝𝘂𝗱𝗶𝗰𝗶𝗮𝗹𝗗𝗿𝗲𝗮𝗺™

𝙰𝙵𝙵𝙾𝚁𝙳𝙰𝙱𝙻𝙴 & 𝙰𝙲𝙲𝙴𝚂𝚂𝙸𝙱𝙻𝙴

CONTRACTMODEL ANSWER

MISTAKE

“Mistake in the formation of contract may be common, mutual or unilateral.” Discuss this statement and explain briefly the cases where such mistakes may avoid the contract.

Section 20 to 22 of the Indian Contract Act, 1872, deals with the provisions of mistake of fact and law. According to section 20 of the Indian Contract Act, 1872, if both the parties to an agreement are under mistake of fact as to the essential part of an agreement, then in such a case, that agreement will be considered void and will not be enforceable by law.

For example: – If ‘A’ wants to sell his horse to ‘B’ and ‘B’ agrees to buy the horse but at the time of making an agreement neither party was aware that the horse has died, then in such a case, this agreement will be considered void.

In the leading case of Workmen of Appin Tea Estate vs. The Industrial Tribunal, the Hon’ble court held that to make a valid and lawful contract, the consent must be free and not affected by any mistake of fact.

Moreover, in the leading case of Dularia Devi vs. Janardan Singh, the Hon’ble court held that in case of mistake of fact as to essential part of an agreement, that agreement will be considered void.

According to section 21 of the Indian Contract Act, 1872, if parties to an agreement are under mistake of any law enforceable in India, then in such a case, that agreement will not be considered void and that agreement will be enforceable by the law.

This section is based upon the principle that everyone must know the law of land whereas if parties are under mistake of any foreign law, then in such a case, that mistake will be considered mistake of fact and agreement will be considered void.

According to the provisions of Indian Contract Act, 1872, if both the parties to an agreement are under mistake, then only the agreement will be considered void but what if only one party has erroneous opinion regarding the matter of fact.

Section 22 of the Indian Contract Act, 1872, deals with these provisions and according to this section, the contract will not be considered avoided. According to this section, if one of the parties to a contract is under mistake of any matter of fact, that contract will be considered valid and lawful.

Hence, it is clear that if both the parties to an agreement are under mistake of fact, then only the agreement will be avoided otherwise the agreement will be considered valid.

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