Agreement Void Where Both Parties are Under Mistake as to Matter of Fact: What You Need to Know

In contract law, an agreement is said to be void when it lacks the essential elements of a valid contract. One such element is mutual assent, or the meeting of the minds between two parties. If both parties are under a mistake as to a material fact, the agreement may be rendered void. This is known as the doctrine of mistake.

What is a Mistake?

A mistake is defined as an erroneous belief about a fact or circumstance that is material to the agreement. It can be either a mistake of fact or a mistake of law.

A mistake of fact occurs when one or both parties believe something to be true that is, in fact, false. For example, if two parties enter into a contract for the sale of a car, but both parties mistakenly believe that the car has a clean title when, in fact, it has a salvage title, the agreement may be void.

A mistake of law, on the other hand, occurs when one or both parties believe that a certain law applies when, in fact, it does not. For example, if two parties enter into a contract for the sale of a product that is prohibited by law, but both parties mistakenly believe that the law permits the sale of the product, the agreement may be void.

Requirements for Mistake to Render an Agreement Void

For a mistake to render an agreement void, the following requirements must be met:

1. Both parties must be mistaken: If only one party is mistaken and the other party knew or should have known about the mistake, the agreement may still be enforceable.

2. The mistake must be mutual: Both parties must be mistaken about the same material fact. If each party is mistaken about a different fact, the agreement may still be enforceable.

3. The mistake must be material: The mistake must be about a fact that is essential to the agreement. If the mistake is only about a minor detail, the agreement may still be enforceable.

4. The mistake must have a substantial effect on the agreement: The mistake must be so significant that it affects the intent of the parties to enter into the agreement.

Conclusion

The doctrine of mistake is an important aspect of contract law that can render an agreement void. If both parties are mistaken about a material fact, the agreement may be unenforceable. As a professional, it is important to understand this concept to ensure that the content being produced is accurate and legally sound. By keeping these requirements in mind, both parties can avoid entering into agreements that may later be deemed void.