(The author is a Lecturer at the Jindal Global Law School, Sonipat. The prompt behind this post came from three of her students: Akshay Purandare, Manan Parekh and Ritvik Mishra. The author thanks Malcolm Katrak for his insightful comments on a draft version of this post.)
In these difficult times of the COVID-19 pandemic, most of us are trying to carry on with life as we normally can. I teach Law of Contracts to second-semester law students, and when faced with the possibility of conducting online classes for the rest of the semester, I was apprehensive that the magic of classroom teaching will be lost. To our happy surprise, both the students and mine, we have found a way to keep our classes are interactive and interesting as ever.
Last Thursday’s class was one such example of the innate resilience of our students’ curiosity and the questioning spirit that we are trying to inculcate in them. The agenda for the day’s lesson was to wrap up the discussion on Free consent. For the past week, we had discussed the concepts of Coercion, Undue influence and Fraud. I introduced the concept of Mistake, and once we had finished one round of reading and explaining sections 20, 21, and 22 of the Indian Contract Act, I was faced with a question I had never before considered myself.
Consider illustration (b) to sec. 20: A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void.
To those of us who have graduated from law school, or even the semester that Contracts I is taught in, this is a no brainer. Both parties are clearly mistaken, and since this mistake is in relation to a fact which is essential to the agreement, this agreement is void.
Students asked: how is consensus ad idem absent in this agreement? Both parties agree to the same thing in the same sense, they want to buy and sell a horse which they both think is alive. There is a perfect meeting of their minds. Why is this not a question of impossibility rather than a mistake of fact?
My answer was along of the lines of the Mistake and Impossibility being two sides of the same coin; at the stage of contract formation, we have Mistake, and at the stage of contract discharge, we have Impossibility. If the horse died after the agreement had been entered into, the contract would be void under sec. 56 because of Frustration. However, since the horse died before the agreement was entered into, the agreement is void because of mistake of fact.
This reasoning is supported by comparing two of the Coronation cases: Krell v. Henry and Griffith v. Brymer. In both cases, one of the parties had entered into agreements to rent a room from the other party, the objective being to view the Coronation Procession of King Edward VII and Queen Alexandra on June 26, 1902. The said procession was postponed to August on account of the King’s ill health. In Krell this postponement happened after the agreement was entered into and thus it was held void on account of Impossibility. On the other hand, in Griffith the agreement was entered into merely an hour after the decision to postpone the procession, and hence the court held this agreement void because of Mistake.
Various authors such as Atiyah, Treitel, and Pollock & Mulla also agree upon this categorisation of Mistake and Impossibility. However, I find myself not fully convinced by this argument, and neither were my students. It seems that the categorisation of the event (as Mistake or Impossibility) rests on a mere technicality; time seems to the sole determining variable. Everything else remaining the same, being labelled a mistake or an impossible act seems to be the exclusive function of whether something happens before or after a certain point in time. How robust can an argument be if a mere change in chronology can completely change the definition of the event, even though the nature remains the same?
Maybe it is a mistake to put such circumstances under the category of Mistake (pun fully intended). Consent is not vitiated or missing in the situations covered by the illustrations to sec. 20. The parties are mistaken as to the existence of the subject matter of the transaction, but they are in full agreement of the terms and conditions of said transaction. Even if we assume that the factum of existence of the subject matter of the agreement is implied in the terms and conditions of the offer that is being accepted, there is still meeting of the minds of the two parties. A wants to sell a horse they both think is alive (but is actually dead) to B for a certain amount of money and B wants to buy a horse they both think is alive (but is actually dead) from A for a certain amount of money. The only way out of this is if A wants to sell a live horse to B and thinks B is buying a live horse from them, but B actually thinks that they are buying a dead horse from A and A is selling them a dead horse.
The case law used by us to explain Mistake is actually clearer than these illustrations. There is Raffles v. Wichelhaus in which both parties contract to buy and sell Surat cotton aboard a ship called Peerless sailing from Bombay. One party thinks the cargo is aboard the Peerless that is sailing in October while the other thinks it is aboard the Peerless sailing in December. There is meeting of minds here regarding the buying and selling of Surat cotton, but no consensus ad idem regarding the ship which is going to be carrying the said cargo, and consequently the time and date of delivery of the Surat cotton.
Another is the 1998 Supreme Court decision in Tarsem Singh v. Sukhminder Singh where one party thinks he is selling 48 bighas of land while the other party thinks he is buying 48 kanals of land. Since 48 bighas of land do not refer to the same quantity of land encompassed by 48 kanals, both parties here are mistaken to the actual amount of land being contracted for. I feel these case laws explain the concept of Mistake better than the illustrations to sec. 20.
Maybe this is just another case where the illustrations were not perfectly illustrative of the concept they were trying to explain. However, the student question still stands as to the reason why the agreements mentioned in illustrations are void, when they are clearly not a case of lack of consensus ad idem.
ABOUT THE AUTHOR
Shivangi Gangwar is a Lecturer at the Jindal Global Law School, Sonipat where she is currently teaching Law of Contracts I to first-year students.