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

Consider these statements. (I) A contract is not voidable merely because only one party was under a mistake as to a matter of fact. (II) An erroneous opinion about the value of the subject-matter is treated as a mistake of fact making the agreement void. (III) A person to whom money is paid by mistake must repay it. Which are correct?

Statements I and III are correct. A unilateral mistake of fact does not make a contract voidable, and money paid by mistake must be repaid. Statement II is wrong because a wrong opinion about value is not treated as a mistake of fact.

  1. AI and III onlyCorrect
  2. BI and II only
  3. CII and III only
  4. DI, II and III

Explanation

Statement I is correct as per Section 22. Statement II is wrong because the Explanation to Section 20 says an erroneous opinion as to value is not deemed a mistake of fact. Statement III is correct as per Section 72, which requires repayment or return of money paid by mistake.

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