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CSEET · Business Laws and Management · Elements of Law of Contracts

Anita agrees to sell Bharat a specific horse. Unknown to both, the horse had died before the agreement was made. What is the legal position?

The agreement is void. Both parties were mistaken about a matter of fact essential to the agreement, namely that the horse was alive. Under the rule on bilateral mistake, such an agreement is void rather than voidable or valid.

  1. AThe agreement is valid and Anita must supply another horse
  2. BThe agreement is voidable at Bharat's option only
  3. CThe agreement is valid but Bharat can claim a price reduction
  4. DThe agreement is void because both parties were mistaken about a matter of fact essential to itCorrect

Explanation

Where both parties are under a mistake as to a matter of fact essential to the agreement, the agreement is void. The existence of the horse is essential, and neither party knew it was dead. This mirrors the horse illustration to Section 20.

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