DR.

RAM MANOHAR LOHIYA NATIONAL LAW

UNIVERSITY, LUCKNOW.

2016-17

Law of Contracts

FINAL DRAFT

Mistake as to the subject matter of the contract

Submitted to: Submitted by:

Dr. Visalakshi Vegesna Aparna Tiwari, Anushthaan Tripathi

Associate Professor (Law) 2nd semester, section A

Dr. RMLNLU, Lucknow. Roll numbers 41 and 42

1
 TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................................... 2

CASES ..................................................................................... Error! Bookmark not defined.

STATUTES................................................................................................................................ 5

LITERATURE REVIEW .......................................................................................................... 6

DECLARATION ....................................................................................................................... 7

OBJECTIVE .............................................................................................................................. 7

NEED OF THE STUDY ............................................................................................................ 7

STATEMENT OF PROBLEM .................................................................................................. 7

ACKNOWLEDGEMENT ......................................................................................................... 8

HYPOTHESIS ........................................................................................................................... 8

INTRODUCTION ..................................................................................................................... 9

MISTAKE OF FACT .............................................................................................................. 10

SECTION 20 OF INDIAN CONTRACT ACT, 1872 ............................................................. 10

ESSENTIAL CONDITIONS FOR AN AGREEMENT TO BE TAKEN VOID UNDER

SECTION 20 OF INDIAN CONTARCT ACT 1872 .............................................................. 11

2
MISTAKE AS TO THE SUBJECT MATTER ....................................................................... 13

MISTAKE AS TO THE NATURE OF PROMISE ................................................................. 16

PERFORMANCE OF SUBJECT MATTER .......................................................................... 17

SECTION 13 AND SECTION 20 OF INDIAN CONTRACT ACT 1872 ............................. 18

CONCLUSION ........................................................................................................................ 19

BIBLIOGRAPHY .................................................................................................................... 20

OTHER SOURCES ................................................................................................................. 20

3
 CASES

A. P. Kochudevassy v State of Kerala AIR 1982 Ker 90. ........................................................ 12

Appanna v Jami Venkatppadu AIR 1953 Mad 611. ................................................................ 16

Bell v Lever Ltd House of Lords [1932] A. C. 161 .................................................................. 13

Cooper v Phibbs (1867) LR 2 HL 149..................................................................................... 12

Couturier v Hastie (1856) 5 HL Cas 673................................................................................ 11

Cundy v Lindsay (187778) LR 3 App Cas 459 ...................................................................... 14

Dularia Devi v Janardan Singh 1990 Supp SCC 216 ............................................................. 16

Galloway v Galloway (1914) 30 TLR 531 .............................................................................. 12

Garrarad v Frankel (1862) 30 Beav 445 ................................................................................. 15

Griffith v Brymer (1903) 19 TLR 434...................................................................................... 12

Hajee Abdul Rahman vs Bombay and Persian Steam Navigation Co (1892) 16 BOMBAY
561........................................................................................................................................ 11

Henkel v Pape (1870) LR 6 Ex 7. ............................................................................................ 14

Jaggan Nath v Secy of State for India (1886) 21 Punj Rec No 21, p. 37................................. 14

Kings Norton Metal Co. v Edridge Merrett &Co. Ltd (1879) 14 TLR 98. .......................... 11

4
Mandakini Pundalik Salker v Chandrasen Raiker AIR 1986 Bom 17 .................................... 16

McRae v The Commonwealth Disposals Commission (1950) 84 CLR 377 ............................ 12

Narsingh Das Kothari vs. Chhuttoo Lal Mishra (1925) I L.R. 50 CALCUTTA 615. ............ 12

Nicholson and Venn v. Smith Marriot (1947) 177 L.T. 189. ................................................... 13

Nursingdass Kothari v Chutto Lal 74 Ind Cas 996. ................................................................. 13

Pratap v Puniya Bai AIR 1977 MP 108. ................................................................................. 16

Prem Singh v Birbal (2006) 5 SCC 353................................................................................... 16

Raffles v Wichehaus [1864] EWHC Exch J19 ......................................................................... 14

Raffles vs. Wichelhause (1864)2 H and C 906. ........................................................................ 18

Sahiban Bibi vs. Madholal (1906) 4 ALJ 475 ......................................................................... 12

Sarat Chandra v Kanailal AIR 1929 Cal 786 ......................................................................... 16

Smith v Hughes (1871) LR 6 QB 597 (DC). ............................................................................ 13

Webster v Cecil (1861) 30 Beav 62 ......................................................................................... 15

STATUTES

Indian Contract Act 1872, s 20 .................................................................................................. 9

Sale of Goods Act 1969, s 6..................................................................................................... 11

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 LITERATURE REVIEW

Avtar Singh, Contract and Specific Relief ( 12th edn, EBC Publishing Ltd 2017) 228. ......... 14

Central National Bank Ltd v United Industrial Bank Ltd AIR 1954 SC 181 .......................... 14

Cooper v Phibbs [1867] UKHL 1 ............................................................................................ 14

Example given by Lord Atkin in Bell v Lever Bros [1932] AC 161 at 224. ............................. 8

J. C. Smith, Contract ( 11th edn, Sweet and Maxwell 2000 ) 495. ............................................ 8

Michael Furmston, Law of Contract ( 15th edn, Oxford University Press 2007 ) 283 .............. 8

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 DECLARATION

We, hereby, declare that the project work entitled MISTAKE AS TO THE SUBJECT
MATTER OF THE CONTRACT submitted to Dr. Ram Manohar Lohiya National Law
University, Lucknow, is a record of an original work done by us under the guidance of Dr.
Visalakshi Vegesna, Associate Professor of Law at RMLNLU. The detailed study on the topic
embodied in the project has not been submitted to any other University or Institute.

OBJECTIVE

This project aims to elucidate the special circumstances that surround the mistake as to the
subject matter of the contract. This mistake is very different from the common parlance and
should always be construed in a manner so as to bring out the legal interpretation associated
with it. This project, therefore, brings out the pre-requisites related to an agreement being void
under section 20 of Indian Contract Act 1872.

NEED OF THE STUDY

The project topic Mistake as to the subject matter of the contract is highly challenging topic
and because of the misinterpretations that surround this particular area of law of contracts, a
thorough research is essentially required in this area.

STATEMENT OF PROBLEM

This project aims to find out the answers to the following questions:

Which section deals with the concerned topic and what are the essentials for an
agreement to be called void under this particular section?

How mistake as to the subject matter is is further clarified and how is it different from
mistake of law?

How does this mistake vitiates the actual consent defined under section 13 of Indian
Contract Act 1872?

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 ACKNOWLEDGEMENT

We express our gratitude and deep regards to our teacher Dr. Visalakshi Vegesna Maam for
giving us such a challenging topic and also for her exemplary guidance, monitoring and
constant encouragement throughout the course of this thesis.

We also take this opportunity to express a deep sense of gratitude to our seniors in the college
for their cordial support, valuable information and guidance, which helped us in completing
this task through various stages.

We are obliged to the staff members of the Madhu Limaye Library, for the timely and valuable
information provided by them in their respective fields. We are grateful for their cooperation
during the period of my assignment.

Lastly, we thank Almighty, our family and friends for their constant encouragement without
which this assignment would not have been possible.

HYPOTHESIS

The project assumes that mistake as to the subject matter is referred to as mistake of fact and
is widely different from mistake of law. It illuminates its classification and brings out the basic
structure that surrounds this area. The different types of mistake such as mistake of identity
and mistake of nature are thoroughly discussed so as to make the underlying doubts clear and
distinguished.

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 INTRODUCTION

The term mistake has a very wide ambit when it comes to legal comprehending. What implies
mistake in common understanding may not imply mistake in legal parlance as well. The law,
does not take the simple ruling that a contract may be void merely because one or both the
parties would not have made it had the true facts been realised.1 For Example, A agrees to buy
from B, a roadside garage abutting on a public highway and unknown to A but known to B, a
bypass road is about to be constructed which will divert the traffic from the garage. Thus, A
cannot escape from the contract on the grounds of mistake.2 A may obtain rescission of the
contract, but not renounce it completely. In popular sense, indeed, all cases of
misrepresentation involve a misunderstanding, but they by no means all raise the legal doctrine
of mistake.

This mistake can be of two types. First, the mistake of fact and second mistake of law. It has
been widely recognized that mistake of fact is an excuse but mistake of law is not an excuse.3
Where the subject matter of a contract has ceased to exist before the contract was made, or has
never existed, an implied term theory would seem to allow three possible situations:

1. A impliedly promised B that a particular thing on which the contract is made, existed.
2. A impliedly promised B that he had taken reasonable care to ascertain that the thing
existed.
3. A and B proceeded on a common assumption, for which neither was more responsible
than the other, that the thing existed and its existence was a condition precedent to a
contract.

When the thing did not exist, A would be liable for damages in 1, and, if he had not taken
reasonable care, in 2; whereas in 3, and in 2 if A had taken reasonable care, both parties would
be discharged from liability-that is, the contract would be effectively void.4

1
Michael Furmston, Law of Contract ( 15th edn, Oxford University Press 2007 ) 283.
2
Example given by Lord Atkin in Bell v Lever Bros [1932] AC 161 at 224.
3
Ignorantia juris non excusat ignorantia facti excusat.
4
J. C. Smith, Contract ( 11th edn, Sweet and Maxwell 2000 ) 495.

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Mistake is called by Sir John Salmond error in consensu or It is an erroneous belief
concerning something. Thus mistake is mainly error in consent. Mistake in legal sense bears
a more restricted meaning than in popular parlance. Mistake, which vitiates a contract, is
sometimes referred to as operative mistake". At common law mistake of expression, want of
mutuality and failure of expression would seem to stand apart from the law of mistake. The
first concerns the realm of interpretation and not the formation of contract. The second is
altogether a negative of agreement and the third appertains to construction. Where a contract
is vitiated by mistake, the contract is void because there is no real consensus between the
parties.

But if the contract is vitiated by misrepresentation, fraud, duress or coercion then it is only
voidable because there is only an error in the motive or the reason which induced one party to
give his consent, i.e., error in causa or the inducing cause.

MISTAKE OF FACT

Mistake of fact may be defined as erroneous beliefs about the meaning of some term or about
the identity of some person. In contract law, a mistake of fact may be grounds
for rescinding or modifying a contract. A party that interprets a term one way, but has reason
to know that another interprets it differently, should bring the issue to light before the contract
is closed. Failure to do this often pushes courts to construe the meaning of the term against the
party which had knowledge of the possible mistake.

SECTION 20 OF INDIAN CONTRACT ACT, 1872

The section 20 of Indian Contract Act 18725 deals with the mistakes as to subject matter of the
contract. It reads as follows:

Agreement void where both parties are under mistake as to matter of fact.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. Explanation.An erroneous opinion as to the value of the thing which

5
Indian Contract Act 1872, s 20.

10
forms the subject-matter of the agreement, is not to be deemed a mistake as to a matter of fact.
Following illustrations will clear this out:

1. 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.
2. 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.
3. 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.

There can be a mistake of identity only when a person bearing a particular identity exists within
the knowledge of the plaintiff and the plaintiff intends to deal with him only ; Kings Norton
Metal Co. v Edridge Merrett &Co. Ltd.6

ESSENTIAL CONDITIONS FOR AN AGREEMENT TO BE TAKEN VOID UNDER

SECTION 20 OF INDIAN CONTARCT ACT 1872

On the basis of mistake the agreement will be void under SECTION 20 if the following
conditions exist:-

1. BOTH parties of an agreement are under a mistake: A common mistake is one when
both parties make the same error relating to a fundamental fact. The case of Hajee Abdul
Rahman vs Bombay and Persian Steam Navigation Co.7 may be illustrated. This case
may be divided into three further categories. The first one is Res Extincta, in which a
contract will be void at common law if the subject matter of the agreement is, in fact,
non-existent. For example, Couturier v Hastie8 . In addition,

6
Kings Norton Metal Co. v Edridge Merrett &Co. Ltd (1879) 14 TLR 98.
7
Hajee Abdul Rahman vs Bombay and Persian Steam Navigation Co (1892) 16 BOMBAY 561.
8
Couturier v Hastie (1856) 5 HL Cas 673.

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Sale of Goods Act 19799 provides that: Where there is a contract for the sale of specific goods,
and the goods without the knowledge of the sellers have perished at the time when the contract
was made, the contract is void. Some other cases include Griffith v Brymer10, Galloway v
Galloway.11 The case of Couturier v Hastie was further interpreted differently by an Australian
court in McRae v The Commonwealth Disposals Commission.12 The second case is the case of
Res Sua wherein a person makes a contract to purchase that which, in fact, belongs to him, the
contract is void. This was stated in Cooper v Phibbs.13

2. Mistake is about a fact: General rule of law is that ignorance of law is no excuse but
ignorance of a fact may be considered as an excuse under certain circumsatnace. Thus,
if a mistake is of a fact it may be declared void but a contract made under mistake as to
any law in force in India , is not voidable; as in Sahiban Bibi vs. Madholal.14
3. The fact must be essential to the agreement: The fact is foundation or root of
agreement or not, i.e. it is essential to the agreement or not , depends on the nature of
agreement. As in the case of Narsingh Das Kothari vs. Chhuttoo Lal Mishra.15

What facts are essential: The answer lies in the nature of promise in each case. Certain facts
such as the identity of the parties, the identity of the nature of the subject-matter of the contract
and the nature and content of the promise itself are very essential for a contract. In the case of
A. P. Kochudevassy v State of Kerala,16 the plaintiff was a wholesale dealer under a rationing
order. He was entitled to transport charges variable according to distance for collecting goods
from government godowns. He was paid at the rate applicable to a zone less than 25 miles in
distance. The distance, in fact, exceeded 25 miles. As soon as the mistake was discovered future
payments were made according to the actual distance. The court dismissed the plaintiffs claim
saying that the mistake was not essential.

9
Sale of Goods Act 1969, s 6.
10
Griffith v Brymer (1903) 19 TLR 434.
11
Galloway v Galloway (1914) 30 TLR 531.
12
McRae v The Commonwealth Disposals Commission (1950) 84 CLR 377.
13
Cooper v Phibbs (1867) LR 2 HL 149.
14
Sahiban Bibi vs. Madholal (1906) 4 ALJ 475.
15
Narsingh Das Kothari vs. Chhuttoo Lal Mishra (1925) I L.R. 50 CALCUTTA 615.
16
A. P. Kochudevassy v State of Kerala AIR 1982 Ker 90.

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 MISTAKE AS TO THE SUBJECT MATTER

Mistake as to subject matter can be classified into six classes. These classifications have been
further defined:

Mistake as to existence

Lord Atkin observed in Bell v Lever Ltd.17 that where the parties have contracted under a
mistake as to the existence of the subject matter, and subsequently discover that, unknown to
either of them, the subject matter had ceased to exist at the time of contracting, the contract
becomes void. In Nursingdass Kothari v Chutto Lal,18 where a contract to sell a plot of land
had been made, but unknown to the vendor and the vendee, the plot of land had been notified
as land to be acquired under City Improvements Act. It was held that the contract was void on
the ground of mistake. There was no belonging to the vendor for the vendee to purchase.

Mistake as to quality

Lord Atkin observed in Bell v Lever Bros,19 Mistake as to the quality of the thing contracted
for raises more difficult questions. In such a case a mistake will not affect assent unless it is
the mistake of both parties, and is as to the existence of some quality essentially different from
the thing as it was believed to be." In Nicholson and Venn v. Smith Marriot,20 a seller describes
the details of a particular good to the buyer but later the buyer finds that it was not same as the
seller described to him and the quality of the good differs. Therefore the contract is void.

A mistake as to the quality of the subject-matter as distinguished from its substance may not
render the contract void. In Smith v Hughes,21 the court found no grounds entitling the buyer
to reject the products. Cockburn CJ summed up by saying: All that can be said is that the

17
Bell v Lever Ltd House of Lords [1932] A. C. 161.
18
Nursingdass Kothari v Chutto Lal 74 Ind Cas 996.
19
Id. at 16.
20
Nicholson and Venn v. Smith Marriot (1947) 177 L.T. 189.
21
Smith v Hughes (1871) LR 6 QB 597 (DC).

13
two minds were not ad idem as to the age of the oats; they certainly were ad idem as to the sale
and purchase of them.

Mistake as to quantity

In Henkel v Pape,22 the defendant wrote to plaintiff enquiring the prices of rifles and suggesting
that he might take as many as fifty rifles. On receipt of a reply he gave a telegraphic order
Send three rifles" which owing to the mistake of the telegraph office was transmitted as Send
the rifles". The plaintiff, in accordance with the tenor of the defendants letter of inquiry sent
fifty rifles. The defendant accepted three and returned rest. In a suit for the price of fifty rifles,
the court held that there was no contract between the parties and the buyer was liable to pay,
as on an implied contract, only the value of the three rifles retained by him.

Mistake as to identity

Where the parties are agreed as to the identity of the subject matter of the contract, the contract
is vitiated on the ground of mistake, and is void. The case of Raffles v Wichehaus,23 is in point.
The contract was for purchase of 125 bales of Surat cotton to arrive Ex Peerless from
Bombay. There were two ships of the same name sailing from Bombay to England one in
October and the other in December. Plaintiff sued for breach of contract as the defendant
refused to take delivery. The defendant pleaded that he had meant the Peerless" sailing from
Bombay in October and not that sailing in December. Pollock, C.B said that it appeared that
both parties did not mean the same thing. If the defendant meant one Peerless" and the plaintiff
another, there is no consensus ad idem and therefore no binding contract.

In Cundy v Lindsay,24 a fraudulent person Blenkarn forged the name of a company and
delivered goods to Cundy through Lindsay. There is a mistake as to the identity of the subject
matter therefore the contract is void. In Jaggan Nath v Secy of State for India,25 a person

22
Henkel v Pape (1870) LR 6 Ex 7.
23
Raffles v Wichehaus [1864] EWHC Exch J19.
24
Cundy v Lindsay (187778) LR 3 App Cas 459.
25
Jaggan Nath v Secy of State for India (1886) 21 Punj Rec No 21, p. 37.

14
called A, a brother of the plaintiff, represented himself as plaintiff, and thereby induced a
Government agent to contract with him. The court finding this, held that there was no valid
contract. In this case, the Governments offer was meant for A and his brother posing as A
accepted it. This prevented real consent. It means that an offer which is meant for one person
cannot be accepted by another.26 The SC observed that mistake of identity will prevent consent
in the sense of an agreement of two persons in the same sense.27

Mistake as to title

Corresponding to the mistake as to the existence of the subject matter is mistake as to title in
cases where unknown to the parties, the buyer is already the owner of that which the seller
purports to sell him. The parties intended to effectuate a transfer of ownership: such a transfer
is impossible: the stipulation is naturaliratione inutilis. This is the case of Cooper v
Phibbs,28 where A to take a lease of fishery from B, though contrary to the belief of both parties
at the time A was tenant for life of the fishery and B appears to have had no title at all. To such
a case Lord Westbury applied and misapprehension as to their relative and respective rights,
the result is that the agreement is liable to be set aside as having proceeded upon a common
mistake.

Mistake as to price

In Webster v Cecil,29 already referred to the defendant who offered to sell his property, while
he intended to write 2250 wrote 1250 instead and the buyer immediately accepted the offer
but the Court declined to enforce the contract, as it stood and refused a decree for specific
performance. Similarly in Garrarad v Frankel,30 where a contract of lease of a house was
agreed to at a rent of 230 but in the written contract the figure 130 was inserted by
inadvertence, the Court held that the contract could not be enforced without amending the
figure.

26
Avtar Singh, Contract and Specific Relief ( 12th edn, EBC Publishing Ltd 2017) 228.
27
Central National Bank Ltd v United Industrial Bank Ltd AIR 1954 SC 181.
28
Cooper v Phibbs [1867] UKHL 1.
29
Webster v Cecil (1861) 30 Beav 62.
30
Garrarad v Frankel (1862) 30 Beav 445.

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 MISTAKE AS TO THE NATURE OF PROMISE

When a deed of one character is executed under the mistaken impression that it is of a different
character, them it is wholly void and inoperative.31 In Mandakini Pundalik Salker v
Chandrasen Raiker,32 allegations were made that unknown to plaintiff the girl whom he
married was illegitimate of her parents was not proved and even if proved, the court held that
it would not have been a material fact. In Prem Singh v Birbal,33 fraudulent representation as
to the character of the document makes it void, when it is as to its contents, the document is
voidable. Thus, where a gift deed is signed under the impression that it is only a power of
attorney, the deed is inoperative.34 If a mistake of this kind is common to both parties, the
agreement is void under Section 20, the parties being mistaken about the very nature of the
promise.

However, a mistake of this kind is usually brought about by the fraud of one party. One of the
parties being under a duty to do so, fails to disclose to the other the true nature of the document
and thereby induces induces him to sign the same under the belief that he is signing some other
instrument of a different nature. In such a case, there is no real agreement as the consent is
nullified by the mistake. This distinction has thus been indorsed by the SC in Dularia Devi v
Janardan Singh.35

The type of consent as required in Section 13 has to be absolute without any discrepancy. In
Pratap v Puniya Bai,36 an illiterate lady consulted her brother on all important matters. Once,
some strangers occupied her land and she approached her brother who, in turn, suggested her
to file an application to the collector. He then took her to the collectors office and obtained
her thumb impressions upon some blank papers. These were then registered as sale deeds. On
knowing this, she challenged the transaction and obtained an order that the transaction was
void.

31
Appanna v Jami Venkatppadu AIR 1953 Mad 611.
32
Mandakini Pundalik Salker v Chandrasen Raiker AIR 1986 Bom 172.
33
Prem Singh v Birbal (2006) 5 SCC 353.
34
Sarat Chandra v Kanailal AIR 1929 Cal 786.
35
Dularia Devi v Janardan Singh 1990 Supp SCC 216.
36
Pratap v Puniya Bai AIR 1977 MP 108.

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 PERFORMANCE OF SUBJECT MATTER

Performance is the completion of obligations undertaken in a contract. A breach of contract is

thus defined as non-performance, i. e. the failure to perform a contractual duty that has arisen.
During the performance of a contract, events which were unforeseen (unexpected or incapable
of being known in advance) by either of the parties at the time of contracting may affect the
possibility of performing the contract and ultimately discharge a party from the duty to perform.
Where performance is impossible, or where the fundamental purpose of one of the parties in
entering the contract has been frustrated due to the occurrence of a supervening (an additional
or unexpected) event, the parties may be discharged from performing the contract.

We have seen above under void agreements that an agreement to do an act impossible in itself
is void. In both the cases, the contract is discharged due to impossibility of its performance, for
law does not recognize what is impossible. Impossibility creates no obligation. Performance
of subject matter may be divided into two categories:

1. PHYSICAL IMPOSSIBILITY

When the subject matter is destroyed the contract becomes impossible to perform and it
amounts to physical impossibility of performance and the contract is void. For example, a
roofing contractor would not be in breach for failing to complete a roof on a building destroyed
by fire through no fault of his.

2. LEGAL IMPOSSIBILITY

When a war like situation arises between two trading countries then it becomes legally
impossible for the countries to perform the contract and it becomes void.

17
 SECTION 13 AND SECTION 20 OF INDIAN CONTRACT ACT 1872

Mistakes are of many kinds. Only the contracts made due to some mistakes are void and all
kinds of mistake do not render a contract void. Under Section 20, a contract is void only when
both the parties are under mistake .The mistake is of a matter of fact and also this matter of fact
is essential to the agreement. It restricts being arisen of real consent of the parties, then Section
13 is applicable and no creation of contract occurs. For creation of contract, real consent of the
parties to the contract is required. When the parties to a contract agree upon the same thing in
the same sense then they are said to consent. If the mistake is such that the real consent of the
party cannot arise then sec 20 will be applicable.

When due to mistake there is an absence of real consent and as a result fair agreement is not
created then sec 13 is applicable. In the case of Raffles vs. Wichelhause,37 the defendant agreed
with plaintiff to buy the balls of cotton that was to come from Bombay on ship named
PEERLESS. There were two ships that were of the same name PEERLESS and both used
to sail from Bombay. One used to sail in October and the other in December .The defendant
took the meaning of the ship PEERLESS that started sail in October while the plaintiff took
it to be December one. The Court held that due to absence of real consent there was no creation
of contract. Here section 13 applied.

37
Raffles vs. Wichelhause (1864)2 H and C 906.

18
 CONCLUSION

Mistake as to the subject matter of a contract is a very definite concept. There occurs a mistake
of a fact that is essential to the contract and due to this, both the parties are under mistaken
beliefs regarding the terms of the contract. According to Indian Contract Act, 1872, consent
is very necessary for a contract. There should be a consensus ad idem in an agreement for
giving rise to a valid contract; the consent as defined under section 13 of the said act should be
real and free of any discrepancy. Meeting of minds should be regarding the same things and
not on different things because this difference originating from mistakes vitiates the sanctity
and purity of a contract. Thus, due to mistake of facts, there is hardly any consensus in s
contract ab initio and the contract so formed is rendered void in a court of law.

If a proper meeting of minds is not obtained, then a contract is formed on a fraudulent basis. It
may be because the mutual consent that was achieved was on two different things, or on one
thing which is non-existent, or based on fraud/misrepresentation of one party. If this provision
under section 20 does not render these contracts void then there would be a lot injustice,
especially in India due to the prevalent illiteracy and incapability to understand the nature of a
contract. Therefore, this section protects the deception which is rather common when it comes
to law of contracts.

19
 BIBLIOGRAPHY

http://www.lawsofbusiness.com/2013/08/mistake-in-contract.html
http://www.advocatekhoj.com/library/bareacts/indiancontract/20.php?Title=Indian%2
0Contract%20Act,%201872&STitle=Agreement%20void%20where%20both%20part
ies%20are%20under%20mistake%20as%20to%20matter%20of%20fact
https://www.legalcrystal.com/cases/search/name:indian-contract-act-1872-section-22-
contract-caused-by-mistake-of-one-party-as-to-matter-of-fact
http://www.lexuniverse.com/contract-law/india/Misrepresentation-and-Mistake.html
http://theindiancontractact.blogspot.in/2012/07/the-indian-contract-act-1872.html
http://gradestack.com/CA-CPT/Free-Consent/Mistake/22682-4562-56378-study-wtw
http://hanumant.com/Mistakes.html
https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-
8#q=mistake+as+to+the+subject+matter+of+the+contract+in+india&*
https://www.lawteacher.net/free-law-essays/contract-law/mistake-is-mainly-error-in-
consent-contract-law-essay.php

OTHER SOURCES

The other sources i. e. the books and statutes have been cited earlier under the heading
Literature Review and Statutes respectively.

20