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CMA Foundation · Fundamentals of Business Laws and Business Communication · Capacity of Parties, Free Consent

Under the Indian Contract Act, 1872, where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is:

The agreement is void. Section 20 of the Indian Contract Act says that when both parties are mistaken about a matter of fact essential to the agreement, there is no valid contract, and neither party needs to avoid it at its option.

  1. AValid and enforceable
  2. BVoidable at the option of either party
  3. CVoidCorrect
  4. DValid but only for part performance

Explanation

Section 20 provides that where both parties are under a mistake as to a matter of fact essential to the agreement, the agreement is void. It is not merely voidable, so the option of voidable is wrong.

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