Indian Contract Act,1872

Act No : 9

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Section : Agreement void where both parties are under mistake as tomatter of fact

20.Agreement void where both parties are under mistake as tomatter of fact. Where both the parties to an agreement are under amistake as to a matter of fact essential to the agreement, theagreement is void. Explanation.-An erroneous opinion as to the value of the thingwhich forms the subject-matter of the agreement is not to be deemed amistake as to a matter of fact. Illustrations (a) A agrees to sell to B a specific cargo of goods supposed tobe on its way from England to Bombay. It turns out that, before theday of the bargain, the ship conveying the cargo had been cast awayand the goods lost. Neither party was aware of the facts. Theagreement is void. (b) A agrees to buy from B a certain horse. It turns out thatthe horse was dead at the time of the bargain, though neither partywas aware of the fact. The agreement is void. (c) A, being entitled to an estate for the life of B, agrees tosell it to C. B was dead at the time of the agreement, but bothparties were ignorant of the fact. The agreement is void.

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