October 29,

2009 [FREE CONSTENT]

2009
Amir Hussain
FREE CONSTENT
UNIVERSITY OF MANAGEMENT AND TECHNOLOGY

10/29/2009

MISTAKE
SUBMIT TO:

SYED IMAD-UD-DIN ASAD

SUBMIT FROM:

AMIR HUSSAIN (093905004)

PROGRAM:

BBA(H)

SUBJECT:

BUSINESS LAWS

UNIVERSITY OF MANAGEMENT AND

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 October 29,
2009 [FREE CONSTENT]

MISTAKE

A valid contract that both parties to the contract should agree to the

same thing in the same sense. If the consent of the Parties is caused by the

bilateral mistake as the mater of fact essential to the agreement , the

agreement is void.

DEFINATION:

Where both the parties to an agreement are under a mistake as to the

matter of fact essential to the agreement the agreement is void.

KIND OF MISTAKE

EXPLANATION

It may assist you to think about mistake in different categories . the most

significant division is between mistake at common law and mistake in

UNIVERSITY OF MANAGEMENT AND
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 October 29,
2009 [FREE CONSTENT]

equity. We will begin with mistake at common law, because if the mistake is

an operative one, the contract is void and there is no need to consider

mistake in equity. We will begin with bilateral mistakes and consider

different types of bilateral mistake –that is to say, the circumstance in which

court find the mistake of both parties to invalidate the apartment contract

.in these cases , if the case is operative it said to result in what is well

describe as a paradox: a void contract . because of the mistake ,the

apparent agreement of the parties lacks consensus and there is no contract.

MISTAKE OF FACT:

• BILATERAL MISTAKEs:

There are two basic types of bilateral mistakes. First each of parties is

mistaken , they do not share their mistake.

In second the parties share the mistake.

mistake.

Where both the parties to an agreement make same mistake of fact the

agreement is void. This mistake arises when both the parties to the contract

are mistaken regarding a fact essential to the contract.

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2009 [FREE CONSTENT]

Section 20 provide “An

“An erroneous opinion as to the value of thing which

forms the subject-matter

subject-matter of the agreement is not to be deemed a mistake of

fact. Thus ,for declaring an agreement void ab-initio , this condition satisfied:

• Both the parties must be under a mistake

• Mistake relate to some fact and to law

• The fact must be essential to the agreement

Example:

I purchase a pen from the other person for 200 hundred rupees after

passing some
some time the actual pen value 100.
100. so he cannot void the

agreement on the basis of mistake.

(b) I contract with other person to sell his pen. We all think that pen is in a

bag but pen was stolen before agreement so agreement is void.

MISTAKE REGARDING THE EXISTENCE OF SUBJECT-MATER:

If both the parties believe the subject-matter of the contract to be in

existence at the time of contract, but in fact it is not in existence , there is

no contract:

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 October 29,
2009 [FREE CONSTENT]

Example: I agree to buy pen from other person a certain pen. It turn out

that the pen was stolen at the time of bargain, other person was aware for

this fact so agreement is void.(bell vs lever bros)1

MISTAKE REGARDING THE IDENTITY OF THE SUBJECT-MATER:

An agreement is void if there is a mutual mistake as the identity of the

subject-matter of the contract. In other words if both the parties are working

under a mistake regarding the identity of the subject-matter i.e one party

had one thing in mind and the other party had another , the agreement is

void due to lack of consensus

Mistake regarding the ownership of subject-

matter:

If a person agree to purchase the property which unknown to himself and

the seller , is owned by himself already , the agreement is void ab-ini

ab-initio.
tio.

Example

1 (1864) 2hvc-906

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2009 [FREE CONSTENT]

A agreed to take a lease of fishery from B. both the parties were not aware
aware

of the fact that a was tenan

tenant for life by inheritance agreement was void

(cooper vs PAHIPPS)2

MISTAKE REGARDING THE IDENTITY OF SUBJECT- MATTER:

If both parties mutual mistake as identity of subject-matter so agreement is

void.
void.

Exp of identity mistake (due

(due to lack of consensus – ad-idem during the

agreement one party had one thing in mind and other party had another).

Example:

one person have two pen set(ink or ball pen).so i agree to purchase from

other person pen , i thinking to purchase the complete set but seller think to

sale only one pen so there is no contract.

2 (1867) L.H 2 HL 149

UNIVERSITY OF MANAGEMENT AND

TECHNOLOGY
 October 29,
2009 [FREE CONSTENT]

MISTAKE REGARDING THE QUALITY OF SUBJECT –

MATTER:

If both the parties are mistake as the quality of subject-matter so the

agreement is void.

Example:

One party contract with me a particular pen We believed that the pen is a

original parker pen but later on it turns out to be a china parker. So

agreement is void.

MISTAKE REGARDING THE QUANTITY OF SUBJECT

MATTER:

If both the parties

parties are mistake as the quantity of subject-matter so the

agreement is void. if there is difference between the quality sold and

purchased.

Example:

Ave 10 pen in shop and one person call me and asked to tell about the

complete price of 10 pen and I told him the price so after some time he send

UNIVERSITY OF MANAGEMENT AND

TECHNOLOGY
 October 29,
2009 [FREE CONSTENT]

the mail to buy the 4 pen and my store manager noted the wrong and send

the 10 pen and send so he accepted the only 4 pen and others returned he

stated that there was no contract as there was no consent and it made on

difference even if make the mistake the third person so I pay the only 4 pen

price.(Henkel vs pope)3

MISTAKE REGARDING THE FACT FUNDAMENTAL TO THE

AGREEMENT:

Where the parties have made a contract based on a common

misapprehension relating to the fundamental subject-matter of the contract,

the agreement is void.

Example:

A and B themselves to be married, made a separation agreement in

which agree to pay 1 pound a week. it was discovered that they were not

validly married. B claimed the promised payment. It was held the agreement

was void, as there was a mistake on their part of fact which , was material to

existence of their agreement.(GALLOWAY VS GALLOWAY)4

3 (1870) l. R 6 EX-7

4 (1914) 30 TLR 531

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2009 [FREE CONSTENT]

UNILATERAL MISTAKES:

Courts are generally unwilling to find that a contract is void at law where the

mistakes of one party. Courts will generally only find the contract void in two

situation.

• In the first case, the non-mistaken party is aware of the other party’s

mistake and proceeds to contract anyway

• In second case, the non-mistaken party has created the mistake to

induce the (now) mistaken party to contract. The largest group of

these cases are those of ‘mistaken identity’

• Valid contract:

if a person due to his own negligence or lack of reasonable care does not

ascertain what he is contracting about, he must blame himself and cannot

avoid the contract. A unilateral mistake is not allowed as a defense in

avoiding a contract so no
no effect on contract and contract remains valid.

EXAMPLE:

I purchase a pen from shahzad ahmed and he asked me that is a original

parker pen but it is not a original pen it’s a china parker so now this is my

mistake that i cannot more care of it and this agreement remain valid.
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Voidable contract:

If the unilateral mistake is caused by fraud or misrepresentation etc. on the

part of the other party , the contract is voidable and can be avoided by the

injured party.

EXAMPLE:

i purchased pen from other person and but this pen nib was a local china nib

its replaced with wing sing nib and I purchased its under the impression that

writing was not smooth so its fraud and such discovery the defect other

person this contract is voidable.

Void agreement:

In two cases, no contract will arise even though there is a unilateral

mistakes.

• Identity is important element of contract , a mistake about the identity

so party can destroy the contract and agreement makes void

• Example:

M an old man with feeble sight , endorsed a bill of exchange for

3000 RS

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2009 [FREE CONSTENT]

Thinking that it was a guarantee. It was held that he was not

liable. (FOSTER VS MACKINNON)5

• Mistakes of Pakistani law:

• If there is a mistake of law of country , the contract is binding because

every one is supposed to know the law of his country . therefore , the

mistake of Pakistani law does not effect the validity of contract. a

contract is voidable due to a mistake to any law in force in Pakistan6

Mistake of foreign 5law:

A mistake as to law not force in Pakistan ( a foreign law ) has the same

effect as the mistake of fact. Contract may be rendered void if both

parties are under a mistake.7

Mistake of private rights:

5 (1932) – 3 KB 497

6 Sec (21) of ACT

7 Section 21 of ACT

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This mistake treated as mistake of fact and is excusable. If a contract

is made in ignorance of private rights , it would be void , i.e. A buys

property which already belongs to him (cooper vs phibbs )8

8 1867 L.R. 2H.L.149

UNIVERSITY OF MANAGEMENT AND

TECHNOLOGY
 October 29,
2009 [FREE CONSTENT]

Works Cited
(2002). BISINESS LAW.

MCKENDRICK, E. (2007). CONTRACT LAW (Vol. 7TH EDITION). OXFORD

( ENGLAND ): PALGRAVE.

R.STONE, C. M. (2004). ELEMENTS OF LAW OF CONTRACT.

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