Comprehension
When parties to a contract are under a 'mistake' regarding an important fact related to such contract, it may affect the contract in two ways. It may, firstly, defeat the consent altogether that the parties are supposed to have given, that is to say, the consent is unreal. Two or more persons are said to consent when they agree upon the same thing in the same sense. Secondly, the mistake may mislead the parties as to the purpose which they had contemplated. Where the mistake does not defeat consent, but only misleads the parties, i.e., where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. However, if the mistake is concerning an erroneous opinion regarding value of the subject-matter of the agreement, it is not a mistake as to a matter of fact. Thus, agreement is void when: (1) both the parties to an agreement are mistaken, (2) their mistake is as to a matter of fact, and (3) the fact about which they are mistaken is essential to the agreement. Further, it is pertinent to note that a mistake, in order to invalidate a contract, should be a mistake of fact and not a mistake of law. Furthermore, where only one party to the contract is under mistake of fact, and the other party is not, the contract is not voidable merely for such reason.
Question: 1

Mr. A entered into an agreement to sell his bicycle which had been kept unused in his attic for a year, to Mr. B, at an agreed price. However, neither party was aware that at the time of entering into the agreement, the bicycle had already been destroyed by a fire in the attic. In the given situation, which of the following statements is true?

Updated On: Jul 14, 2026
  • The agreement is void as both parties were under a mistake as to a matter of fact essential to the agreement.
  • The agreement is void as both parties were under a mistake as to a law in force in India.
  • The agreement is not voidable as only one of the parties was under a mistake as to a matter of fact.
  • The agreement is not voidable as the promise made under the agreement had not been performed.
Show Solution

The Correct Option is A

Solution and Explanation

Mr. A and Mr. B both believed a specific bicycle existed and was being sold, but unknown to either of them, it had already been destroyed by fire before they entered the agreement.


Checking against the requirements for a void agreement, both parties were mistaken (neither knew of the fire), the mistake was one of fact (the physical existence of the bicycle), and that fact was essential to the agreement (you cannot sell an object that no longer exists). All three conditions line up together.


The suggestion that this is a mistake of law does not fit, since nothing about legal rules is in question here, only an unknown physical event. Equally, the idea that only one party was mistaken is wrong, since both were equally unaware, and the question of whether the promise was performed has no bearing on a defect that existed right from the moment of agreement.


So the agreement is void, since it rests on a mutual mistake about a fact, the bicycle's existence, that was essential to the bargain.

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Question: 2

Ms. X and Ms. Y entered into a contract of sale of an article, while reeling under the erroneous belief that the sale of the article, which was the subject-matter of the agreement, was permitted by the law in force in India. In the given situation, which of the following statements is true?

Updated On: Jul 14, 2026
  • The contract is valid.
  • The contract is voidable at the option of Ms. X.
  • The contract is voidable at the option of Ms. Y.
  • The contract is not voidable.
Show Solution

The Correct Option is D

Solution and Explanation

Ms. X and Ms. Y both wrongly believed that the law in force in India permitted the sale of the article. The key here is identifying what kind of mistake this is, a mistake about a physical or factual detail, or a mistake about what the law says.


Believing that something is legally permitted when it is not is a mistake about a rule of law, not about a fact. The doctrine that renders agreements void only reaches mistakes of fact shared by both parties, it deliberately excludes mistakes of law.


Since the mistake here is one of law and is shared equally by both Ms. X and Ms. Y, neither of them individually gets a right to avoid the contract, and the contract as a whole does not become voidable either. Options that grant Ms. X or Ms. Y a personal option to avoid, or that call the contract simply valid without reasoning, both miss this point.


So the contract is not voidable, because a shared mistake of law carries no legal consequence of this kind.

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Question: 3

Mr. J entered into an agreement with Mr. K for the sale of Mr. J's 'club'. At the time of entering into the agreement, while Mr. J believed that he was agreeing to sell his golf club, Mr. K believed that he was agreeing to buy a clubhouse owned by Mr. J. The agreement is void because:

Updated On: Jul 14, 2026
  • Mistake of fact defeated the consent of the parties.
  • Mistake of fact misled the parties as to the purpose of the contract.
  • Mistake of fact was regarding the identity of parties.
  • Both (A) and (B).
Show Solution

The Correct Option is D

Solution and Explanation

Mr. J and Mr. K used the same word, "club", to mean two completely different things, a golf club for Mr. J and a clubhouse for Mr. K. This is a classic case of latent ambiguity in the subject-matter of a contract.


Because each party had an entirely different object in mind, there was never a true meeting of the minds on what was actually being sold, so, in one sense, the mistake defeated real consent from forming at all. At the same time, each party proceeded believing they were buying or selling a specific, identifiable thing, so the mistake also misled them as to the very purpose of the bargain they thought they were making.


This is not a case about the identity of the parties, both knew exactly who they were dealing with, the confusion is purely about the subject-matter itself. Since both effects, the failure of real consent and the misleading of the parties as to purpose, are present together and are not contradictory, the fuller and more accurate explanation covers both.


So the agreement is void because both (A) and (B) correctly capture what went wrong.

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Question: 4

Mr. D appointed Mr. K to manage the cultivation of his land as he was unable to manage it himself due to his advanced age. Mr. K agreed to manage the cultivation of Mr. D's land if he granted Mr. K a lease of the said land. Mr. D agreed to the same and signed a deed which was, unknown to both parties, a gift deed of the land and not a lease deed. In the given situation, which of the following statements is true?

Updated On: Jul 14, 2026
  • Mr. D and Mr. K were reeling under a mistake as to a matter of fact essential to the agreement.
  • Mr. D and Mr. K were reeling under a mistake as to a matter of law essential to the agreement.
  • Mr. D was reeling under a mistake as to a matter of fact essential to the agreement.
  • Mr. D was reeling under a mistake as to a matter of law essential to the agreement.
Show Solution

The Correct Option is A

Solution and Explanation

Mr. D intended to grant a lease, and Mr. K agreed to manage the cultivation on the strength of getting that lease, but the deed they actually signed turned out to be a gift deed, and neither of them realised this at the time.


Whether a document is a lease or a gift is a question of fact about what that document actually is and does, not a question of legal rules, so this rules out any option framing it as a mistake of law.


The mistake was also not confined to Mr. D alone. Mr. K equally believed he was receiving a leasehold interest in return for his management services, so he shared the same false understanding about the deed's true character. Since the nature of the document goes to the very core of the bargain between them, essential and shared by both, this is a mutual mistake of fact.


So Mr. D and Mr. K were both mistaken about a fact essential to their agreement.

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Question: 5

Ms. X and Ms. Y entered into a contract of sale of an article which was agreed to be shipped by Ms. X in a ship named 'The Cruiser' and delivered to Ms. Y on an agreed date. Mr. X shipped the said article by a different ship named 'The Mariner', without informing Ms. Y and the article was delivered to Ms. Y on the agreed date. In the given situation, which of the following statements is true?

Updated On: Jul 14, 2026
  • The agreement is void as both parties were under a mistake as to a matter of fact essential to the agreement.
  • The agreement is void as both parties were under a mistake as to a law in force in India.
  • The agreement is valid as both parties were under a mistake as to a matter of fact not essential to the agreement.
  • The agreement is valid as both parties were under a mistake as to a matter of fact essential to the agreement.
Show Solution

The Correct Option is C

Solution and Explanation

Here, delivery of the article was completed on the date both parties agreed to, even though it travelled on a different ship than originally named. The name of the ship was never a term the parties treated as central to their bargain, so mixing it up does not strike at the root of the contract.

  1. Void for essential mistake of fact: Would apply only if the confused fact went to the core of what was being exchanged; the vessel's name was incidental, not central, so this does not hold.
  2. Void for mistake of law: There is no legal rule either side misunderstood, only a shipping detail, so this is ruled out.
  3. Valid, mistake not essential: Fits, since the goods reached Ms. Y as promised and on time regardless of which ship carried them.
  4. Valid, mistake essential: Internally inconsistent, an essential mistake of fact would void the agreement, not merely leave it valid.

The agreement stands, so the correct answer is the agreement is valid as both parties were under a mistake as to a matter of fact not essential to the agreement.

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