Scribd Logo
Upload

Welcome to Scribd!

  • 258 views

    MISTAKE OF FACT and MISTAKE OF LAW

    Uploaded by

    Ruchita Kaundal
    Mistake of fact and mistake of law can impair free consent in a contract. A mistake of fact involves a misunderstanding between parties, while a mistake of law involves ignorance of the law. A bilateral mistake of fact, where both parties are mistaken about an essential fact, renders a contract void. However, a unilateral mistake typically does not affect a contract's validity, unless the mistake relates to the nature of the contract or the identity of the contracting parties. A mistake of Indian law is not an excuse for a party, as ignorance of the law is not a defense. However, a mistake of foreign law by both parties can be treated as a mistake of fact, making the contract void.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    MISTAKE OF FACT and MISTAKE OF LAW

    Uploaded by

    Ruchita Kaundal
    258 views5 pages
    Mistake of fact and mistake of law can impair free consent in a contract. A mistake of fact involves a misunderstanding between parties, while a mistake of law involves ignorance of the law. A bilateral mistake of fact, where both parties are mistaken about an essential fact, renders a contract void. However, a unilateral mistake typically does not affect a contract's validity, unless the mistake relates to the nature of the contract or the identity of the contracting parties. A mistake of Indian law is not an excuse for a party, as ignorance of the law is not a defense. However, a mistake of foreign law by both parties can be treated as a mistake of fact, making the contract void.

    Original Title

    MISTAKE OF FACT and MISTAKE OF LAW.docx

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Mistake of fact and mistake of law can impair free consent in a contract. A mistake of fact involves a misunderstanding between parties, while a mistake of law involves ignorance of the law. A bilateral mistake of fact, where both parties are mistaken about an essential fact, renders a contract void. However, a unilateral mistake typically does not affect a contract's validity, unless the mistake relates to the nature of the contract or the identity of the contracting parties. A mistake of Indian law is not an excuse for a party, as ignorance of the law is not a defense. However, a mistake of foreign law by both parties can be treated as a mistake of fact, making the contract void.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    258 views5 pages

    MISTAKE OF FACT and MISTAKE OF LAW

    Uploaded by

    Ruchita Kaundal
    Mistake of fact and mistake of law can impair free consent in a contract. A mistake of fact involves a misunderstanding between parties, while a mistake of law involves ignorance of the law. A bilateral mistake of fact, where both parties are mistaken about an essential fact, renders a contract void. However, a unilateral mistake typically does not affect a contract's validity, unless the mistake relates to the nature of the contract or the identity of the contracting parties. A mistake of Indian law is not an excuse for a party, as ignorance of the law is not a defense. However, a mistake of foreign law by both parties can be treated as a mistake of fact, making the contract void.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    MISTAKE OF FACT and MISTAKE OF LAW

    Mistake of Law and Mistake of Fact

    One important factor of a valid contract is free consent. Both the parties
    involved in the contract must enter the contract willingly and under no
    pressure. There are factors which impair the free consent of either party. Once
    such factor is “mistake”, which includes a mistake of law and mistake of fact.
    Let us take a more detailed look into it.

    Free Consent

    According to section 14 of the Indian Contract Act 1857, free consent is


    defined as “consent is said to be free when it is not caused by coercion, under
    influence, fraud, misrepresentation, and mistake.” In the previous article
    about Free Consent, we have already covered the first four factors. Here we
    will be looking at the mistake factor.

    A mistake is an erroneous belief that is innocent in nature. It leads to a


    misunderstanding between the two parties. Now when talking about a
    mistake, the law identifies two types of mistakes, namely

    i. A Mistake of Law

    ii. A Mistake of Fact


    Mistake of Law

    This mistake may relate to the mistake of the Indian laws, or it can be a


    mistake of foreign laws. If the mistake is regarding Indian laws, the rule is that
    the ignorance of the law is not a good enough excuse. This means either party
    cannot simply claim it was unaware of the law.

    The Contract Act says that no party shall be allowed to claim any relief on the
    grounds of ignorance of Indian law. This will also include a wrong
    interpretation of any legal provisions.

    However, ignorance of a foreign law is not given a similar treatment. Ignorance


    of the foreign law is given some leeway, the parties are not expected to know
    foreign legal provisions and their meaning. So a mistake of foreign law is in
    fact treated as a mistake of fact under the Indian Contract Act.

    Mistake of Fact

    Then there is the other type of mistake, a mistake of fact. This is when both
    the parties misunderstand each other leaving them at a crossroads. Such a
    mistake can be because of an error in understanding, or ignorance or
    omission etc. But a mistake is never intentional, it is an innocent overlooking.
    These mistakes can either be unilateral or bilateral.

    Bilateral Mistake

    1) When both parties of a contract are under a mistake of fact essential to


    the agreement, such a mistake is what we call a bilateral mistake.
    2) Here both the parties have not consented to the same thing in the same
    sense, which is the definition of consent.
    3) Since there is an absence of consent altogether the agreement is void.
    4) However, to render an agreement void the mistake of fact should be
    about some essential fact that is of importance in a contract.
    5) So if the mistake is about the existence of the subject matter or its
    title, quality, quantity, price then it would be a void contract. (case
    laws and examples given below)

    Example: A agrees to sell to B his buffalo. But at the time of the agreement,
    the buffalo had already died. Neither A nor B was aware of this. And so
    there is no contract at all, i.e. the contract is void due to a mistake of fact

    Unilateral Mistake

    1) A unilateral mistake is when only one party to the contract is under a


    mistake.
    2) In such a case the contract will not be void.
    3) So the Section 22 of the Act states that just because one party was
    under a mistake of fact the contract will not be void or voidable.
    4) So if only one party has made a mistake of fact the contract remains a
    valid contract.
    5) However, there are some exceptions to this.
    6) In certain conditions, even a unilateral mistake of fact can lead to a void
    or voidable agreement.
    7) Let’s see a few of these exceptions via some examples and case studies.

    1. When Unilateral Mistake is as to the Nature of the Contract: In


    such a case the contract can be held as void. Let us see the example of
    Dularia Devi v. Janardan Singh (1990) Here an illiterate woman put
    her thumb impression on two documents thinking they were the same.
    She thought the document was to gift some property to her daughters.
    But the other document was a Sale deed to defraud the women out of
    more of her
    2. Mistake of the Identity of the Person contracted with: For
    example, when A wants to enter into a contract with B but mistakenly
    enters into a contract with C believing him to be B.
    In the case of Cundy v Lindsay (1878), Lindsay & Co were manufacturers
    of linen handkerchiefs amongst other things who received an order of
    250 Dozen handkerchiefs from a man named Blenkarn. The man further
    mentioned his address to be at 37, Wood Street, Cheapside. Lindsay and
    Co assumed that the order was from the reputed firm located at Wood-
    street named Blenkiron & Co, and thus delivered the order. Later the
    man sold the goods to an innocent party, Cundy. When Blenkarn failed
    to pay for the said order Lindsay & Co sued Cundy for the goods. Lindsay
    and Co claimed that since they sold the goods to Blenkarn under the
    mistaken assumption that they were selling it to Blenkiron & Co, there
    was no real consent to the contract of sale.

    It was held that there was a unilateral mistake by the claimants


    regarding the identity of the other party making the contract void
    and hence the title of the goods did not pass to Blenkarn, and
    therefore could not have passed to Cundy who was liable to return
    the goods back to Lindsay and Co.
    Conclusion

    The validity of a contract is hindered when consent is gained due to a


    mistake by the parties. As discussed, a mistake can be of two types, Mistake
    of fact and Mistake of law. When consent to a contract is gained due to a
    bilateral mistake of fact, the contract is said to be void but when the mistake
    occurs due to a unilateral mistake of fact, the agreement is valid except in
    the cases of mistake regarding the nature of the contract or identity of the
    parties to the contract. Similarly, when consent to a contract is gained due
    to a mistake of the Indian law it is a valid contract but if it is due a foreign
    law by both the parties, the contract is said to be void.

    You might also like