Mistake

• Mistake may be defined as an erroneous belief

concerning something.
• 1. there may be mistake in the mind of the
parties and thus when there is no consensus
ad idem there cannot be a contract.
• 2. there may be genuine agreement but there
may be mistake as to matter of fact relating to
that agreement.
 1. When there is no consensus ad idem

• Section 13- Two or more persons are said to

consent when they agree upon the same thing
in the same sense.“ is called consent.
• When they do not agree to the same thing in
same sense there may be absence of meeting
of minds of the parties, or there may be no
consensus as idem. In such cases there arises
no contract which can be enforced.
 Raffels V Wichelhaus

• The buyer and the seller entered into an agreement under

which the seller was to supply a cargo of cotton to arrive
“ex Peerless from Bombay”. There were 2 ships of the
same name i.e, peerless and both were to sail from
Bombay, one in October and the other in December. The
buyer had in mind Peerless sailing in October whereas the
seller thought of the ship sailing in December. The seller
dispatched cotton by December ship but the buyer
refused to accept the same. In this case, the offer and
acceptance did not coincide and there was no contract
and therefore it was held that the buyer was entitled to
refuse to take delivery.
 Mistake as to matter of fact
• Section 20- Where both the parties to the
agreement are under a mistake of fact
essential to the agreement, the mistake is
called a bilateral mistake of fact and the
agreement is void.
• 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
 Essentials of section 20
• Both the parties to the contract should be
under a mistake
• Mistake should be as regards a matter of fact
and not law
• The fact regarding which the mistake is made
should be essential to the agreement.
 Mistake of both the parties
• As per section 20 if both the parties are under
mistake then the contract is void.
• If the mistake is unilateral, the validity is not
affected thereby.
• Section 22-A contract is not voidable merely
because it was caused by one of the parties to
it being under a mistake as to a matter of fact. 
 Ayekam Angahal Singh v The Union of India

• There was an auction for the sale of fishery rights and

the plaintiff was the highest bidder making a bid of rs
40,000. the firshery rights had been auction for 3 years.
The rent in fact was Rs 40,000 per year. The plaintiff
sought to avoid the contract on the ground that he was
working under a mistake and he thought that he made a
bid of Rs 40000 being the rent for all the three years
• Held- that since the mistake was unilateral, the contract
was not affected thereby and the same could not be
avoided.
 Mistake of fact and not law
• “Ignorantia juris non excusat,” i.e., ignorance of
law is no excuse.
• Section 21- A contract is not voidable because it
was caused by a mistake as to any law in force
in India; but a mistake as to a law in force in
India has the same effect as a mistake of fact. 
• If two persons are on the belief that a particular
debt is barred by Indian law of Limitation the
contract is not voidable.
 Mistake essential to the agreement
• The fact regarding which the mistake is made
should be essential to the agreement. Whether it
is essential or not depends on the contract.
• Some typical cases of mistake invalidating the
agreement are as follows-
• (A) Mistake as to the existence of subject-matter
• Ex- A being entitled to an estate for the life of B,
agrees to sell it to C. B was dead at the time of
the agreement but both parties were ignorant of
the fact. The agreement is void.
 Mistake as to quantity of subject-matter

• Henkel v. Pape
• Pape wrote to Henkel inquiring the price of rifles and
suggested that he might buy as many as 50. On receipt
of the information, he telegraphed “Send three rifles.”
But because of the mistake of the telegraph
authorities, the message transmitted was “Send the
rifles.” Henkel despatched 50 rifles.
• Held : There was no contract between the parties.
However, P could be held liable to pay for three rifles
on the basis of an implied contract
 Mistake as to quality of the subject matter

• Smith V Hughes there was a sale of parcel of oats by

sample by P to D. D refused to accept the oats on
the ground that he thought that the oats were old
when in fact they were new. P sued D for damages
for non- acceptance.
• Held- there was no mistake as to identity but as to
age of goods. The contract in this case was not for
the sale of old oats but of a specific parcel by
sample. The contract was therefore valid and D for
liable for not accepting the parcel.
 Mistake as to title to the subject-matter

• Where the parties believe that the seller is the

owner of the thing which he purports to sell,
but in fact, he has no title to it, the contract is
void on the ground of mistake.
• A agreed to take a lease of a fishery from B
though contrary to the belief of both parties
at the time A was tenant of the fishery and B
never had any title to it. The contract was void
 Mistake as to the identity of the person
• Where A intends to contract with B but by mistake enters into a
contract with C believing him to be B, the contract is void on the
ground of mistake.
• In Each other presence-
• Philips v. Brooks- In this case a man, North , called in person at a
jeweller’s shop and chose some jewels (ring), which the jeweller was
prepared to sell him as a casual customer. He tendered in payment a
cheque which he signed in the name Sir Goerge Bullough , a person
with credit. Thereupon North was allowed to take away the jewels
which North pledged with defendants who took them in good faith.
Plaintiff sued defendants claiming the recovery of the ring.
• Held- agreement was not void on the ground of mistake in so far as
the plaintiff contracted to sell and deliver the ring to the person in
the shop. The contract was voidable on the ground of fraud. The
defendant has acquired good title in this case.
 Lewis V Averay
• The plaintiff advertised his car for sale. A rogue visited visited
him and offered to buy the car for 450 pounds and wanted to
pay by cheque and taken away the car immediately. He posed
himself as Richard Greene, a well known film actor. He
showed to the plaintiff a special invitation card to a studio to
prove that he is an actor, so that Plaintiff parted with the car.
He then sold the car to the defendants, who was acting
innocently. The cheque was dishonored. The plaintiff sued the
defendants to recover the car or its value.
• Held- the contract was voidable because of fraud. Since the
person had already sold the car to an innocent buyer before
the plaintiff had avoided the contract, the defendants get
good title to the car and thus was not liable.
 Ingram V Little

• A swindler took away the plaintiff’s car by posing as

Hutchinson, a well- known person. He gave a bogus
cheque for the car, which was dishonored. Meanwhile,
he sold the car to the defendants, who took the same
in good faith. The plaintiff brought an action against
the defendants to recover back the car or its value.
• Held- the plaintiff had intended to sell the car to
Hutchinson and not to the swindler and therefore,
neither the swindler nor the defendant could get good
title to the car, and therefore the defendants was
liable to return the car or to pay damages instead.
 Mistake as to the existence of material fact

• Bell V Lever Brothers Ltd-

• the Lever brothers appointed Bell as Chairman of the Board of
Directors of the Niger Company, a subsidiary of Lever Brothers, for
5 years at an annual salary of 8000 pounds. After 3 years the Niger
company got amalgamated with a third company, as a
consequence of which Bell was retired prematurely. Lever Brothers
promised to pay him compensation amounting to 30000pounds.
• Subsequent to the said payment Lever Brothers discovered that
Bell had been guilty of some secret transaction in his personal
name during the 3 years of directorship for which Bell could have
been dismissed without the payment of any compensation. i.e
Lever Brothers had made an agreement regarding payment of
compensation and also had paid the same, in ignorance of the fact
of the wrongful conduct on the part of the Bell. They sought for
rescission of contract and recovery of the compensation paid by
mistake.
 2 questions
• Whether there was such a mistake which had
made the contract void?
• Could Lever Brothers avoid the contract on the
ground that Bell had committed fraud by not
disclosing his acts of misconduct while
accepting compensation of 30000 pounds
from Lever Brothers?
 House of Lords
• The contract was valid and binding on lever brothers and were
not entitled to any refund of money paid by them. The mistake
in this case did not relate to the subject- matter but it only
related to the quality of the service contract, and therefore the
contract could not be said to be void on the ground of mistake.
• As regards the question of fraud due to non-disclosure of
misconduct by Bell, it was held that Bell had no such duty of
disclosure and mere silence as to facts in this case did not
amount to fraud and the contract was not voidable either on
that ground.
• As regards the contention that contract was voidable on the
ground of fraud due to non-disclosure of the fact of his own
misconduct by Bell, the same was rejected as there was held
to be no duty of disclosure of such facts in the present case.