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Thread: What is the effect of a mistake upon a contract

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    Moodle What is the effect of a mistake upon a contract

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    Mistake
    Q. How will you distinguish a ‘Mistake of law’. Discuss their legal effects on a contract. (2001)
    Q. What is the effect of a mistake upon a contract?
    (i) Where one of the parties to the contract is undue a mistake.
    (ii) Where both the parties to the contract are under mistake. (1994)
    1. Introduction:
    Parties of the contract should agree to the same thing and same sense. If parties give their consent under any error, there is no agreement. So valid contract should be free from any kind of mistake, it means that there should be consensus ad-idem.
    1. Kinds of mistake:
    Following are kinds of mistake.
    (a) Mistake of fact
    (b) Mistake of law
    (I) Mistake of fact:
    Case law
    1990 CLC 1514
    It was held that where both the parties to an agreement are under a mistake as to matter of fact essential to agreement, the agreement is void.
    Mistake of facts has following kinds.
    (a) Bilateral mistake
    (b) Unilateral mistake
    (a) Bilateral mistake:
    According to sec 20
    “Where both the parties to an agreement are under a mistake as to matter of fact, essential to the agreement, there is a bilateral mistake and the agreement is void.”
    Conditions:
    (i) Both the parties must be under a mistake.
    (ii) Mistake must relate to some fact.
    (iii) The fact must be essential to an agreement.
    Example:
    A agrees to sell to B a specific cargo of goods supposed to be its way from England to Karachi. It turns out that, before the day of bargain, the ship convening the cargo had been cats away and the goods lost. Neither party was aware of this fact. The agreement is void.
    I. Types of bilateral mistake:
    Bilateral mistake have following types.
    (1) Mistake as to existence of subject matter:
    The parties may be mistake as to existence of subject matter.
    (2) Mistake as to identity of subject matter:
    If both parties to contract are under mistake as to identity of subjects matter the contract is void.
    (3) Mistake regarding ownership of subject matter:
    If a person agree to purchase the property, which already belongs to him but both the parties are not aware of this fact, the agreement is void.
    (4) Mistake regarding price of subject matter:
    If both the parties are under mistake regarding price of subject matter the agreement is void.
    (5) Mistake regarding the quantity of subject matter:
    When both the parties are under a mistake regarding the quantity of subject matter the agreement is void.
    (6) Mistake as to the quality of subject matter:
    It case of mistake by parties as to the quality of subject matter, the agreement is void.
    (b) Unilateral mistake:
    Where only one of contracting parties is at mistake it is a unilateral mistake. Unilateral mistake is mistake of one party and does not render the contract void able.
    Effect of unilateral mistake:
    (a) Valid contract:
    If a person due to his own negligence makes a wrong contract, he can not avoid the contract.
    (b) Void able contract:
    If unilateral mistake is caused by fraud etc on the part of other party, the contract is void able and can be avoid by the injured party.
    ( c) Void agreement
    (i) Where identity of the contracting party is essential to the contract, the mistake makes the agreement void.
    (ii) Where one of the parties to a contract without of his own, is made to commit a mistake as to nature of the contract, the agreement would be void.
    (II) Mistake of law:
    Following are kinds of mistake of law.
    (a) Mistake of Pakistani law:
    Mistake of law does not affect the validity of the contract.
    Example:
    If some one is caught while travelling without ticket in train. He can not be excused on the ground that he was not aware that ticket is must for travelling.
    (b) Mistake of foreign law:
    Under sec 21 of the act, a mistake as to a law not in force has the same effect as the mistake of fact. The contract may be rendered void if both parties are under mistake as to foreign law.
    1. Conclusion:
    To conclusion it can be said that, mistake relating to fact is mistake relating to law is mistaken of fact are void and contract under mistake of law are generally valid.

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