Mistake of fact | In a case, while the defendant intended to sell the land in terms of Kanals, the plaintiff intended to purchase in Bighas. The area of the land was as essential to the agreement as to the price….  Is the mistake with which the parties were suffering related to a matter essential to the agreement?

Question: Mistake of fact | In a case, while the defendant intended to sell the land in terms of Kanals, the plaintiff intended to purchase in Bighas. Bighas and Kanals are different units of measurements. In the northern part of the country, the land is measured in some States, either in terms of Bighas or in terms of Kanals. Both convey different impressions regarding the area of the land.

The area of the land was as essential to the agreement as to the price, which incidentally, was to be calculated on the basis of the area. Is the mistake with which the parties were suffering related to a matter essential to the agreement? Answer with reference to the sections of the Indian Contract Act and case law, if any. [Punjab JS 1999]

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Answer

Section 13 of The Indian Contract Act,1872 states that two or more persons are said to consent when they agree upon the same thing in the same sense. (Consensus ad idem)

Section 14 of The Contract Act,1872 states that, Consent is said to be free when it is not caused by-

• • coercion, as defined in Section 15, or
  • undue influence, as defined in section 16, or
  • fraud, as defined in Section 17, or
  • misrepresentation, as defined in Section 18, or
  • mistake subject to the provisions of Sections 20, 21 and

Section 20 of the Act lays down as under:-

“Agreement void where both parties are under mistake as to a 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 forms the subject matter of the agreement, is not to be deemed a mistake as to a matter of fact.”

This Section provides that an agreement would be void if both the parties to the agreement were under a mistake as to a matter of fact essential to the agreement. The mistake has to be mutual and in order that the agreement be treated as void, both the parties must be shown to be suffering from a mistake of fact. Unilateral mistake is outside the scope of this Section.

The other requirement is that the mistake, apart from being mutual, should be in respect of a matter which is essential to the agreement.

An agreement upon the same thing in the same sense is known as true consent or consensus ad idem, and is at the root of every contract. This seems to have been picked up from a passage in the judgment of Lord Hannen in Smith v. Hughes [(1871) LR6 QB 597 (DC)] “It is essential to the creation of a contract that both parties should agree to the same thing in the same sense. Thus if two persons enter into an apparent contract concerning a particular person or ship, and it turns out that each of them, misled by a similarity of name, had a different person or ship in mind, no contract would exist between them: Raffles v. Wichelhaus [(1864) 2 H&C 906]

The facts of the present case are borrowed from the leading case law of Sri Tarsem Singh v. Sri Sukhminder Singh [(1998) 3 SCC 471]. The court held that if a thing is not understood by the parties in the same sense, the agreement would be invalidated at the inception stage itself even if the communication gap is discovered at a later stage.

In this case, the issue arose as to a mistake of fact with regard to the “price” or the “area” if would be a matter essential to the agreement?

In the instant case, the dispute between the parties was with regard to the price of the land, whether the price to be paid for the area was calculated in terms of “bighas” or “kanals”, different units of measurement which was essential to the formation of the contract in the same sense.

The words “discovered to be void” about the mistake as to the unit of measurement, therefore, comprehend a situation in which the parties were suffering from a mistake of fact from the very beginning but had not realized, at the time of entering into the agreement or signing of the document, that they were suffering from any such mistake and had, therefore, acted bona fide on such agreement. The agreement in such a case would be void from its inception, though discovered to be so at a much later stage.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X