• Meaning, definition and type of Mistake

Mistake is 'misconception'. The party of a contract intending to do anything but does something else is a mistake. Mistake is another factor, which hampers free consent. In order to make a valid contract the parties to contract must agree upon the something in the same sense where the contract is entered in to under mistake consent cannot be said to be free. Mistake is an erroneous belief relating to the subject matter of the contract.

According to Black's Law Dictionary, Mistake means an error, misconceptions or misunderstanding and erroneous belief. Section 20 of Indian Contract Act, 1872 clearly defines that where both the parties to an agreement are under mistake as to the matter of fact essential to the agreement, the agreement is void. In this regard, Nepal Contract Act, 2056 Section 13 has prescribed as a matter under the void contract. It states in the section 13(g) that a contract can not be performed because the subject matter of the contract is not clearly known to the contracting parties. Mistake may be defined as an erroneous belief about something.

When one or both parties of contract commit mistake to the contract or when both the parties misunderstand about the subject matter of the contract, it is said to be fundamental error. On this condition the contract turns into void.

  •  Types of mistake:
  1. Mistake of law: 'Ignorance of Law is no Excuse'. It is well set rule. No one can ignore the law. Everyone must know the law of the country. All the citizens are presumed to be known the prevailing laws. A party can not be allowed to get any relief on the ground that it had done a particular act in ignorance of law. A mistake of law does not give the right to the parties to avoid the contract.
  2. Mistake of fact: Mistake of fact is related to the subject matter of the contract. It is also a cause to turn the contract void. If factual mistake is of serious nature like formation or essential factor that is responsible to void the contract.  Negligible mistake occurs that is excusable. Fundamental error is relating to the subject matter and it is taken as serious mistake.
  • Bilateral mistake: Where both the parties to an agreement are under a mistake as to a mater of fact, essential to the agreement, the agreement is void.
  • Unilateral mistake: If mistake is committed by one of the party of the contract is called the unilateral mistake. Generally, a contract by unilaterally mistake is not void. A unilaterally mistake does not affect the validity of the contract. If the unilateral mistake caused by fraud or misrepresentation there is possibility to avoidance of the contract.