Mistake as to identity of a person:
Mistake as to identity of the other person will make a contract void when the intention was to enter into a contract only with a particular person other than the person with whom the contract has been entered into. A mistake as to the identity of a person contracted with when such identity is essential to the contract, would invalidate the contract.
The plaintiffs were metal manufacturers. They received a letter from “Hallam & Co “, to whom the plaintiffs supplied the wire. Subsequently it was traced that there was no such firm as “Hallam & Co,” but it was fabricated by one Mr Wallis who obtained the wire and sold it to the defendants. The plaintiffs sued the defendants claiming that the contract with Hallam & Co was void and that the wire was still their property. The Court held that the contract was not void on the ground of mistake but only voidable for fraud. Similar view was also taken min Lewis v Averay. It must therefore, be noted that in order, the contract may be treated as void for mistake, the identity of a person must be an essential element of a contract. Where the identity of the party contracted with is immaterial, mistake as to identity will not avoid the contract.
Mistake as to subject matter:
Where both the parties believe in existence of certain state of things which in reality do not exist, the contract shall be held to be void. Where two persons contract for the sale of an article, each having a different article in mind but believe article in mind but believe themselves to being the agreement the contract is void on the ground of mistake as to the subject matter of a contract. Similarly, the article may not be in existence at the time of the contract and the parties are ignorant if the fact. The agreement is void.
1) In this case, Raffles & Wichelhaus entered into a contract for the sale of cargo to arrive. “Ex.Peerless” from Bombay. There were two ships by that name sailing from Bombay and each party had different ship in mind. The contract was held to be void for mutual mistake.
2) Mackinnon, an old man of feeble sight endorsed a bill of exchange believing that it was a guarantee. The endorsement was held to be void because of the mistake as to the nature of contract committed by Mackinnon. .
3) 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.
4) A and B believing themselves married, made a separation agreement under which the husband agreed to pay a weekly allowance to his wife. Later on, it transpired that they were not married. When wife claimed for arrears of allowance, it was held that the agreement was void because there was a mutual mistake on the point of fact which was material to the existence of the agreement.
In Couturier v Hastie goods were sold while they were on board a ship on their way to England, but it was unknown to the parties that the goods were already heated. The contract was held to be void. It must be noted that the fact about which the parties are mistaken must be essential to the agreement. A mistake as to collateral fact does not invalidate the contract.
Mistake as to subject matter may relate to the extent of quantity title or price of the subject matter.
Erroneous opinion as to the value of the thing
Exception to section 20 provides that an erroneous opinion as to the value of the thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact.
A agreed to purchase a car from B for Rs 20,000 thinking that it was worth Rs 20,.000 while it was worth only Rs 10,000 .
The agreement is not void because an erroneous mistake as to the value of a thing is not a mistake and, therefore, the contract is binding on A.
Mistake of law:
Section 21 of the act provides that 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 not in force in India has the same effect as a mistake of fact.
A and B make a contract on the erroneous belief that a particular debt is barred by the Indian Law of limitation. The contract is not voidable.