Previous Year Questions: When people enter into a contract and there’s a misunderstanding about a crucial fact, it can impact the agreement in two main ways. First off, it might completely undermine the consent that the parties are supposed to give, meaning the agreement isn’t based on genuine agreement. Consent happens when two or more people agree on the same thing in the same way. Secondly, the mistake could mislead the parties about the purpose they had in mind.

If the mistake doesn’t completely invalidate the consent but just confuses the parties, meaning both sides are mistaken about a crucial fact essential to the agreement, then the agreement becomes void. However, if the mistake involves an incorrect opinion about the value of the subject matter of the agreement, it’s not considered a mistake about a fact.

So, an agreement becomes void when three conditions are met:

(1) both parties are mistaken,

(2) the mistake is about a fact, and

(3) the mistaken fact is crucial to the agreement.

It’s worth noting that for a mistake to nullify a contract, it has to be a mistake of fact, not a mistake of law. Also, if only one party makes a mistake of fact, and the other party is aware, the contract isn’t voidable just for that reason.

Section on Law of Contracts for Previous Year Questions

Question: Imagine Mr. A decided to sell his bicycle, which he hadn’t used for a year and had stored in his attic. Mr. B agreed to buy it at an agreed-upon price. However, both parties didn’t know that the bicycle was destroyed in a fire in the attic at the time they made the deal. In this scenario, which statement below is true?

A. The agreement becomes invalid because both parties were unaware of a crucial fact essential to the agreement.

B. The agreement is rendered void because both parties were mistaken about a law currently in effect in India.

C. The agreement cannot be declared voidable since only one of the parties was mistaken about a factual matter.

D. The agreement remains valid and is not voidable just because the promise made in the agreement has not been fulfilled.

Question: Did Ms. X and Ms. Y mistakenly believe that they could legally sell an article in India when they entered into a contract, even though the law actually prohibits such sales?

A. The contract is valid.

B. The contract is voidable at the option of Ms. X.

C. The contract is voidable at the option of Ms. Y.

D. The contract is not voidable.

Question: Imagine Mr. J thought he was selling his golf club, while Mr. K believed he was buying a clubhouse from Mr. J. The agreement they entered into is considered void because:

A. Mistake of fact defeated the consent of the parties.

B. Mistake of fact misled the parties as to the purpose of the contract.

C. Mistake of fact was regarding the identity of parties.

D. Both (A) and (B)

Question: Mr. D appointed Mr. K to manage the cultivation of his land as he was unable to manage it himself due to his advanced age. Mr. K agreed to manage the cultivation of Mr. D’s land if he granted Mr. K a lease of the said land. Mr. D agreed to the same and signed a deed which was, unknown to both parties, a gift deed of the land and not a lease deed. In the given situation, which of the following statements is true?

A. Mr. D and Mr. K were facing a challenge because they had misunderstood a crucial fact that was necessary for the agreement.

B. Mr. D and Mr. K found themselves in a difficult situation due to a misunderstanding about a legal aspect that was vital to the agreement.

C. Mr. D was struggling with a mistake concerning a key fact that was essential for the agreement.

D. Mr. D was dealing with the consequences of a mistake related to a crucial legal aspect that was necessary for the agreement.

Question: Did Ms. X and Ms. Y make a deal to sell an item, with Ms. X agreeing to send it on the ship ‘The Cruiser’ to Ms. Y by a certain date? However, Ms. X actually sent the item using a different ship, ‘The Mariner,’ without telling Ms. Y, and the item still arrived on the agreed-upon date. In this scenario, which statement is correct?

A. The agreement is not valid because both parties made a mistake about a crucial fact that was essential to the agreement.

B. The agreement is not valid because both parties were mistaken about a law that is currently in effect in India.

C. The agreement is valid since both parties made a mistake about a non-essential fact, and it does not impact the overall validity of the agreement.

D. The agreement is valid even though both parties were mistaken about a crucial fact; however, this mistake doesn’t affect the overall validity of the agreement.

1. A

2. D

3. D

4. A

5. C

Read Also: CLAT 2021 English Language, Practice Set E – Previous Year Questions