Indian Contract Act Section 20 — Agreement void where both parties are under mistake as to matter of fact

CHAPTER II OF CONTRACTS, VOIDABLE CONTRACTS AND VOID AGREEMENTS

Commercial / Corporate

Summary

An agreement is void if both parties are mistaken about a fact that is essential to the agreement. This means the mistake must be shared by both sides and must relate to something fundamental to what the agreement is about.

The explanation clarifies that a wrong opinion about the value of the thing the agreement deals with is not considered a mistake as to a matter of fact. So, if both parties simply misjudge how much something is worth, that does not make the agreement void under this section.

Official Text

Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.

Explanation.—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. Illustrations