It is not only fraud, misrepresentation, coercion and under influence, which make a contract void or voidable, but validity of a contract can be affected when mistake is committed during making of the contract. The reality is that valid contract should be free from any kind of mistake on behalf of parties to the contract.
2. Meaning of Mistake
Mistake means an error is comprehending facts, meaning of words or law, which cause one party or both parties to enter into a contract without understanding the obligations or results.
3. Kinds of Mistake and Effect of Mistake
Mistake can be classified into following two major kinds
i. Mistake of Fact
It is settled principle that if a mistake is about such matter of fact, which is essential to an agreement, such mistake of fact can affect the agreement. Mistake of fact can be further classified into following types.
a. Unilateral Mistake
A unilateral mistake happens where only one party to a contract is under mistake. This kind of mistake is the most common one. Such kind of mistake can affect a contract in the following two cases:
a-i. A party’s own mistake
When a party makes a contract with another party and does a mistakes during making of the contract, such party cannot avoid the contract.
a-ii. Mistake caused by Fraud etc
When a party makes a contract with another party and unilateral mistake is committed by this another party upon the party through fraud etc, such contract is voidable and affected party can avoid such contract.
b. Bilateral Mistake
A bilateral mistake happens where both the parties to an agreement are under a mistake about a matter of fact, which is essential to the agreement. Following points further explain bilateral mistake.
b-i. Essentials of Bilateral Mistake
Following are the main essential to explain it.
x. Mistake of both the parties
For happening of bilateral mistake, it is essential that both the parties to a contract should be under mistake.
y. Relation between Mistake and Fact
For happening of bilateral mistake, it is essential that mistake must relate to some fact.
z. Relation between Fact and Agreement
For happening of bilateral mistake, it is essential that fact must be essential to an agreement.
b-ii. Types of Bilateral Mistake
a. Mistake about subject matter
b. Mistake about price of subject matter
c. Mistake about quality of subject matter
d. Mistake about identity of subject matter
e. Mistake about ownership of subject matter.
b-iii. Affect of Bilateral Mistake
When both the parties to an agreement are under a mistake about a matter of fact, which is essential to the agreement, the agreement is void. It is case of mutual or common mistake. In such situation, contract does not remain binding upon both the parties and, therefore, cannot be performed.
ii. Mistake of Law
Contrary to mistake of fact, if a mistake is done about any law, which in force in Pakistan, a contract is not voidable. It means that mistake of law does not affect validity of a contract as far as Pakistani law is concerned. However, if a mistake is done about a law, which is not in force in Pakistan, such mistake has the same effect as that of mistake of fact. It means that contract can become void if both the parties are under mistake about foreign law.
To conclude, it can be stated that role of mistake is of great importance; it can affect validity of a contract. It can make a contract either void or not voidable. The reality is that mistake not only affect validity of a contract, but also affects performance of a contract.