Q: Elaborate section 22 of Indian Contract Act ?

Ans: Section 22 of Indian Contract Act mentions about the mistake of fact. 

Contract caused by mistake of one party as to matter of fact.—A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.

Then there is the other type of mistake, a mistake of fact. This happens when both the parties miscomprehend each other leaving them at a crossroads. Such a mistake can be because of an error in understanding, or ignorance or omission etc. Here a mistake is never intentional but it is an innocent overlooking. These mistakes can either be unilateral or bilateral.

Bilateral Mistake: 

When both parties of a contract have committed  a mistake of fact which is crucial to the agreement, such a mistake is what we call a bilateral mistake. Here both the parties have not consented to the same thing in the same sense, which is the definition of consent. Since there is an absence of consent altogether the agreement is void.

However, to render an agreement void the mistake of fact should be about some essential fact that is of significance in a contract. So if the mistake is about the existence of the subject matter or its title, quality, quantity price etc then it would be a void contract. But if the mistake is of something inconsequential, then the agreement is not void and the contract will remain in place.

For instance, A agrees to sell to B his buffalo. But at the time of the agreement, the buffalo had already died. Neither A nor B was aware of this. And so there is no contract at all, i.e. the contract is void due to a mistake of fact.

Unilateral Mistake:

A unilateral mistake is when only one party to the contract is under a mistake. In such a case the contract will not be void. So the Section 22 of the Act states that just because one party was under a mistake of fact,  the contract will not be void or voidable. So if only one party has made a mistake of fact the contract remains a valid contract.

However, there are some exceptions to this. In certain conditions, even a unilateral mistake of fact can lead to a void or voidable agreement. Let’s see a few of these exceptions via some examples and case studies.

When Unilateral Mistake is as to the Nature of the Contract: In such a case the contract can be held as void. Let us see the example of Harish and Darpan. Here the Harish entered into the non disclosure agreement thinking that it is an agreement of business of car manufacturing. Harish thought the document was of the non disclosure agreement of car design. But the other document was of  non disclosure agreement of Volvo manufacturing business to defraud the Harish .This contract will be held voidable. 

When the Mistake is regarding the Quality of the Promise:

 There was an auction being held by Darpan to start business with Harish of volvo manufacturing. Harish was thinking about the business of Volvo manufacturing and mistakely entered into the contract.  Hence the contract was held as voidable. 

Mistake of the Identity of the Person contracted with: For instance, when Harish would like to enter into a non disclosure agreement with Darpan but mistakenly enters into a non disclosure agreement with Darshit believing him to be Darpan.  The contract will be void.