Contract Law

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Introduction

A contract can be defined as an agreement which is legally enforceable. This means that with free consent, the promise made by the competent parties in return for some lawful consideration grows into an agreement. This ultimately becomes a contract when it is enforced in the eyes of the law.

On the other hand, an agreement which cannot be legally enforced is known as void agreement. According to ‘CONTRACT ACT 1872’, a mistake is an agreement expressly declared void. There are two kinds of mistake that are considered as void agreement namely; a bilateral mistake of law and mistake of fact.

1. Mistake of fact: a private law can be referred to as the anticipation of errors from one perspective and the enhancement of their result on the other. In accordance with the contract law, the term mistake is an expression that is connected particularly to circumstances where the intended party generally develops an opinion about the world at the time of contracting which is wrong.
2. During a contract, a mistake is a fault on either contracting parties with respect to the facts, regulation and the understanding of the contract. This kind of void agreement is developed when the intending parties enter into an agreement by making a mistake of fact that is fundamental to the subject matter of that agreement.[1]

An example of this kind of mistake can be when A makes an agreement to sell specific goods to B from one country to another. It turns out to be in a way that before the day of the agreement, the shipwrecks down and the goods were nowhere to be found. This fact was not known by either of the parties. This agreement is rendered to be void.

Another example can be illustrated as two parties agree to enter into an agreement for a certain cow. At the time of the sale, the cow expired. This fact was not known to either of the parties. This agreement is known as void because, at the time of formation of the contract, specific goods were not in existence. Also, the seller, as well as the buyer, had no knowledge of it. And contract of sale was avoided.

The two categories of mistake of fact are:

Unilateral mistake:

Under Contract law, unilateral mistake can be described as a mistake made by only one contracting party or we can say that unilateral mistake materializes when only single party to the contract is not clear about the subject matter or terms of the contract, it is the common mistakes made by the contracting parties mostly because of terms of contract.

The most common example of unilateral mistake with respect to the description of the provisions, for e.g. In a contract for the sale of shirts, one party believes that the buttons being used in the shirts are replaceable buttons while the term button referred to a standard type of buttons as in this situation one party have this fallacious belief this is called “unilateral mistake”.

The other mistake occurs in the contract is the mutual mistake in which both the parties are mistaken about the facts or the provisions of the contract so therefore if we take the above example into consideration if both the parties were unaware of the fact that the standard button would be used then it will be considered as a mutual mistake.[2]………………………………………….