Download - MISTAKE (FREE CONSENT)
-
7/28/2019 MISTAKE (FREE CONSENT)
1/36
MISTAKE(FREE CONSENT)
SUBMITTED BY-SHUBHAM DHIMAN(2038)
SUBMITTED TO-MISS RITU GUPTA
-
7/28/2019 MISTAKE (FREE CONSENT)
2/36
One of the essentials of a valid contract mentioned in Section 10 is
that the parties should enter into contract with free consent.According to Section 14, Consent is said to be free when it is notcaused by
1. Coercion (Sec-15)or
2. Undue influence (sect-16)or
3. Fraud (Sec-17)or4. Misrepresentation (Sec-18)or
5. Mistake(provisions of Section 20, 21 and 22).
If the consent of one of the parties is not freeconsent, i.e., it has been caused by one or other ofthe above stated factors the contract is not a validone. If, however, the consent is caused by mistake the agreement is void.
-
7/28/2019 MISTAKE (FREE CONSENT)
3/36
MistakeMistake may be defined as an error in consensus.In other words,An agreement is valid as a contract only when the parties agree upon thesame thing in the same sense.
Consent cannot be said to be "free" when an agreement is entered into under amistake.
One, or both, of the parties may be working under some misunderstandingor misapprehension of some fact relating to the agreement. Such contractsare said to be have been caused by mistake.
Example:A has two cars - an Ambassador and a Fiat. He agrees to sell one of them to B.It is not clear as to which of the two cars he is selling. A might be thinking to sellthe ambassador car while B might be thinking to buy the Fiat car.Hence, there is no identity of mind on the subject-matter of the agreement.
Therefore, there is no sale in this case.
-
7/28/2019 MISTAKE (FREE CONSENT)
4/36
Mistake is of two kinds:I) Mistake of law and
II) Mistake of fact.
MISTAKE
MISTAKE OFLAW
MISTAKE WITHREGARD TOORDINARY
LAW
MISTAKE WITHREGARD TO
FOREIGN LAW
MISTAKE WITHREGARD TO
PRIVATERIGHT
MISTAKE OFFACT
BILATERALMISTAKE
UNILATERALMISTAKE
-
7/28/2019 MISTAKE (FREE CONSENT)
5/36
Mistake on a point of law does not affect thecontract; Mistake on a point of law in force in aforeign country is to be treated as mistake of fact.
Example:A and B make a contract grounded on the erroneous belief that aparticular debt is barred by the Indian law of limitation. This is a validcontract. The reason is that every man is presumed to know the law ofhis own country and if he does not he must suffer the consequences ofsuch lack of knowledge ,But if in the above case, the mistake is relatedto the law of a limitation of a foreign country, the agreement could havebeen avoided
-
7/28/2019 MISTAKE (FREE CONSENT)
6/36
MISTAKE WITH REGARD TO ORDINARY LAW
MISTAKE WITH REGARD TO FOREIGN LAW
MISTAKE WITH REGARD TO PRIVATE RIGHT
Mistake of law may be of following types:
-
7/28/2019 MISTAKE (FREE CONSENT)
7/36
The contract is binding because everybody is supposed to know
the law of country.
According to this: ignorance of law is no excuse and party
cannot be allowed any relief on that ignorance.According to section 21, a contract is not voidablebecause it was caused by a mistake as to any law in
force in India.
-
7/28/2019 MISTAKE (FREE CONSENT)
8/36
Hence mistake of law does not give right to the
parties to avoid the contract.
Example:A and B make a contract under a mistaken belief that aparticular debt is barred by the Indian Law of Limitation, thecontract is not voidable. However, if one of the parties makes a'mistake of law' through the inducement, whether innocent orotherwise, of the other party, the contract may be avoided.
-
7/28/2019 MISTAKE (FREE CONSENT)
9/36
2. Mistake With Regard ToForeign LawOne is supposed to know the law of the land i.e., his owncountry but one is not expected to know the law of the wholeworld.Thus if an Indian commits a mistake of English Law
while in India, he is not punishable.
Mistake of foreign law is excusable.It is treated as a mistake of fact. Parties can avoid the
contract on the ground of mistake of foreign law.
-
7/28/2019 MISTAKE (FREE CONSENT)
10/36
3. Mistake With Regard ToPrivate RightMistake of private law of the parties is also excusable. Aperson cannot know the private law of other parties, hence he is
given the benefit of such ignorance.Thus mistake of private law is treated at par with that ofmistake of foreign law. Hence, parties can avoid the contract onthe ground of mistake of private law of parties.
-
7/28/2019 MISTAKE (FREE CONSENT)
11/36
-
7/28/2019 MISTAKE (FREE CONSENT)
12/36
It may be of two types:(a) Bilateral mistake(b) Unilateral mistake.
MISTAKE OF FACT
BILATERAL
MISTAKE
UNILATERAL
MISTAKE
-
7/28/2019 MISTAKE (FREE CONSENT)
13/36
(A) Bilateral Mistake
According to section-20 of the act.-
where both the parties to an agreement are under a
mistake as to a matter of fact essential to the agreement,
there is a bilateral mistake and the agreement is void.
Here there is no real correspondence of offer and
acceptance, each party understanding the contract in a
different way. In reality there is no agreement at all, there
being total absence of consent.
-
7/28/2019 MISTAKE (FREE CONSENT)
14/36
An agreement will be void on the ground ofmistake if:1. There must be a mistake relating to the
formation of contract.
2. The mistake must be mutual.
3. The mistake must relate to a fact.
4. The mistake is about a fact essential to
law.
(A) Bilateral Mistake
-
7/28/2019 MISTAKE (FREE CONSENT)
15/36
Bilateral mistake may be
(1) Mistake as to the subject-matter.(2) Mistake as to the possibility of performance.
(A) Bilateral Mistake
-
7/28/2019 MISTAKE (FREE CONSENT)
16/36
(1) Mistake as to the
subject-matterMistake as to the subject-matter of
contract means Where both the parties to anagreement are under a mistake relating to the
subject-matter of the contract, the agreement
is void.
-
7/28/2019 MISTAKE (FREE CONSENT)
17/36
Mistake as to the subject-matter covers the following
cases-
a) Mistake regarding the existence of the subject-matterb) Mistake regarding the identity of the subject-matterc) Mistake regarding the title of the subject-matter, i.e., itsownershipd) Mistake regarding the price of the subject-mattere) Mistake regarding the quantity of the subject-matterf) Mistake regarding the quality of the subject-matter
1. Mistake as to the
subject-matter
-
7/28/2019 MISTAKE (FREE CONSENT)
18/36
(a) Mistake regarding the existenceof the subject-matterWhere both the parties believe that the subject-matter is in
existence, but in fact the subject-matter was not in existence at the
time of contract, the agreement is void.
Example:A agreed to sell to B his car parked in his
garage. The car had already been destroyedby fire before the date of contract. Both A
and B did not know this fact. The agreement
is void.
-
7/28/2019 MISTAKE (FREE CONSENT)
19/36
(B) Mistake regarding the identityof the subject-matterWhere both the parties are under a mistake as to the
identity of the subject-matter, i.e., one party thinks to deal
with one thing and the other with something else, the
agreement will be void.
Example:A has two scooters - a Lambretta and
a Vespa. A agreed to sell one of them
to B. It is not clear which of the two
scooters he is selling. A might be
thinking to sell Lambretta while B
might thinking to purchase Vespa.
There is no agreement.
-
7/28/2019 MISTAKE (FREE CONSENT)
20/36
In Raffles Vs. Wichelhaus (1864) the buyer and
the seller entered into an agreement under which theseller was to supply a cargo of cotton to arrive expeerless from Bombay. There were two ships ofthe same name. i.e., Peerless, and both were to sail
from Bombay, one in October and the other inDecember. The buyer in mind Peerless sailing inOctober, whereas the seller thought of the ship sailingin December. The seller dispatched cotton byDecember ship but the buyer refused to accept thesame.
In this case the offer and acceptance did not coincideand there was no contract and, therefore, it was heldthat the buyer was entitled to refuse to take delivery
Case 2: Raffles Vs. Wichelhaus (1864)
-
7/28/2019 MISTAKE (FREE CONSENT)
21/36
(C) Mistake regarding the title of thesubject-matter, i.e., its ownershipWhere the seller and buyer believe that the seller has title
to the property, but in fact it is discovered that the
property belongs to a third party, the agreement is void.
Example:A agreed to take a fishery on leasefrom B. Both of them believed thatB was the owner. But later on itwas discovered that fishery in factbelonged to A. It was held that theagreement was void [Cooper v.Phibbs]
-
7/28/2019 MISTAKE (FREE CONSENT)
22/36
(D) Mistake regarding the price ofthe subject-matterWhere both the parties are under a mistake as tothe price of the subject-matter, the agreement is
void.
xample:A agreed to hire B's auditorium(Hall) at Rs. 800. But whilewriting the agreement, the figure
was written as Rs. 1,800 bymistake. The agreement is void.However, the Court can alsorectify this mistake, [Dagadu v.Bhana]
-
7/28/2019 MISTAKE (FREE CONSENT)
23/36
(E) Mistake regarding the quantityof the subject-matterWhere both the parties are under a mistake regardingthe quantity of the subject-matter, the agreement is void.
Example:A enquired about the price of rifle from B informing that hemay buy as many as 50 rifles. On receiving a reply from B, hesent a telegram 'send three rifles'. By mistake of the telegraphoffice, the message transmitted to B was "send the rifles." So Bdispatched 50 rifles. A accepted only three rifles andreturned the rest. It was held that there was no contract. Thebuyer was, however, liable to pay only for three rifles on the
basis of an implied contract. [Hankel v. Pope].
-
7/28/2019 MISTAKE (FREE CONSENT)
24/36
(F) Mistake regarding thequality of the subject-matter
Where both the parties are under a mistake as to
the quality of the subject matter, the agreements is
void.Example:A agreed to sell to B a piece of Mona Lisa painting in his gallery. Avery high price was paid for the painting. But unknown to both of
them, a thief had stolen the genuine Mona Lisa painting andsubstituted a copy. After taking the delivery, B came to know thatit was not the genuine Mona Lisa painting. The agreement is voidas both the parties are under a mistake regarding the quality of
the subject-matter i.e., painting.
-
7/28/2019 MISTAKE (FREE CONSENT)
25/36
2. Mistake as to possibility ofperformanceIf both the parties believe that the
contract is capable of performance, but due
to impossibility it cannot to performed, theagreement is void
The performance of agreement may not be possible because of-1. Physical Impossibility2. Legal Impossibility
-
7/28/2019 MISTAKE (FREE CONSENT)
26/36
1. Physical ImpossibilityThe act may be physically impossible to
perform and hence void. The law does not
compel any person to do something which is
impossible.
Example:A agreed to hire 'B's room to witness Corporation
Procession. Unknown to both of them, the processionhad already been cancelled. The agreement is void.[Griffith v. Brymer]
-
7/28/2019 MISTAKE (FREE CONSENT)
27/36
2. Legal Impossibility
Legal Impossibility means when an agreement requires to
do that which cannot be done legally.
The act may be legally impossible to perform and hence
void.Example:A agreed to sell 100 kg of rice. The
Government ban the sale of rice byintroducing rationing. The contract
is void.
-
7/28/2019 MISTAKE (FREE CONSENT)
28/36
(B) Unilateral Mistake
-
7/28/2019 MISTAKE (FREE CONSENT)
29/36
(B) Unilateral MistakeAccording to section 22 of the contract act-a contract is not voidable merely because itwas caused by one of the parties to it beingunder a mistake as to matter of fact.
Where one of the parties to the contract is under a
mistake it is called unilateral mistake. Thus as ageneral rule, unilateral mistake will not render acontract void.
-
7/28/2019 MISTAKE (FREE CONSENT)
30/36
(B) Unilateral MistakeA party cannot be allowed to avoid a contract on
the ground of its own mistake which may be due to
its carelessness or negligence.
Example:A buys rice from B thinking that it is old Basmati rice, but in fact, it is
new Basmati rice. A cannot avoid the contract. However, where mistakewas caused by fraud or misrepresentation of the other party, a contract
will be voidable on that ground.
-
7/28/2019 MISTAKE (FREE CONSENT)
31/36
(B) Unilateral Mistake
However, where consent given by a party under a mistakeis so fundamental that it goes to the root of the contract,
the agreement becomes void.
Thus the exceptions where the Unilateral Mistake rendersthe contract void are as follows-
1. Mistake as to the identity of the person2. Mistake as to the nature of transaction
-
7/28/2019 MISTAKE (FREE CONSENT)
32/36
1. Mistake as to the identityof the personWhen the identity of the person is fundamental to the contract and a
mistake is committed regarding that, the contract may be avoided.
It is a fundamental rule of law that if I intend to contract with Hari, Ram cannot contract withme. If I make an offer to Hari, can Ram accept it? Obviously, not. If he accepts it, then there will beno contract.Example-A women fraudulently represented to a firm of jewellers that she was the wife of acertain baron (zamindar). She obtained two pearl necklaces under the pretext ofgetting the jewellery with a pawn broker. The Court held that there was no contractbetween the jeweller and the woman as the jeweller wanted to deal with the wife ofthe baron which she was not. .Hence the pledge had to return the jewellery. [Lake v.Simons]
-
7/28/2019 MISTAKE (FREE CONSENT)
33/36
2. Mistake as to the nature ofcontractAnother case in which unilateral mistake renders a
contract void is mistake as to the nature of
contract.
Where a person enters into a contract of different nature,
which he never intended without his own mistake but due to the
mistake or fraud of the other party, the contract is void.
In such a case when he signs the document his mind does not go
with his signature, i.e., he does not intend to sign the document
at all. There is absence of consent and the contract is, therefore,
void.
-
7/28/2019 MISTAKE (FREE CONSENT)
34/36
2. Mistake as to the nature ofcontractSuch instances are very common in case of illiterate persons orpersons having poor eye-sight due to old age or other reasons.
Example:A induced an old man of feeble sight to sign a promissory note by telling him"Baba ye power of attorney hai. " (It is a power of attorney*).Promissory note is void as there is a mistake as to the nature of contract. The mindof the old man did not go with his signature
*Power of attorney: it is a formal, legally valid document that authorizes one person or
party to act on the behalf of another
-
7/28/2019 MISTAKE (FREE CONSENT)
35/36
MISTAKE
Mistake of fact
Of the
countryOf the foreign
country Bilateral mistake Unilateral mistake
Mistake as to subject matter Mistake as to
possibilityAs to
person
As to
nature
Physical impossibility Legal impossibility
existence identity quality quantity title price
Mistake of law
-
7/28/2019 MISTAKE (FREE CONSENT)
36/36