Mistake

Hello everyone, welcome back to my blog. So, for today i will explain about the topic of mistake. Hope you guys enjoy 😙..

        Section 14(e) of Contract Act 1950 provides about mistake where it subjects to sections 21, 22 and 23 of the same Act. First of all, what is mistake under contract law?

      Mistake can be defined as where a party try to set aside a contract which he had misunderstood the contract entered by him. If he know the truth, he will not enter such contract. Mistake can be claimed by both party and it also in operative through English law and Malaysian law. Under common law, mistake is considered as void ab initio which means a contract is void in the beginning if mistake arises. However, under Malaysia law, contract will become void as effect in the later consequence. There are 2 types of mistake which are unilateral mistake which means as one (1) party commit mistake and mutual or bilateral mistake which means as two (2) or more parties commit mistake.
In regard with Section 21, mistake is committed by both or more parties in a contract and the mistake must be in matter of mistake of fact which essential to an agreement. Section 21 stated that where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. The effect under this section make an agreement shall be void pursuant to section 2(g) of the Act. Basically, there are only 3 circumstances pertaining to the substance of mistake of fact which are mistake as to the existence, identity and possibility of performing contract. However, in the case of Sheikh Brothers, another two circumstances were introduced which are mistake as to quality and quantity of subject matter of a contract. These two circumstances was clearly explained in the case of Smith v Hughes which stated P agrees to buy from D a certain parcel of oats which both believes to be old oats. They are in fact new oats, and unsuitable for the purpose for which P wants them. There is a valid contract despite the mistake, as the subject matter only differs in some quality, not substance. This means the oats sold by defendant in fact was new old which does not suffice the agreement as plaintiff ask for old oats. Therefore, contract was void.
Moreover, section 23 means as where mistake is committed only by one 1 party or unilateral mistake. This section stated that a contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact. The difference between section 23 and 21 is only the number of party who committed the mistake as the circumstances is same which consistent with the 3 fundamental substance to mistake of fact. While the effect under this section caused a contract to be either valid, void, but not voidable. Next, in regard with section 22, this provision provides about mistake of law. This section stated a contract is not voidable because it was caused by a mistakeas to any law in force in Malaysia, but a mistake as to a law not inforce in Malaysia has the same effect as a mistake of fact. This section gives effect same like section 23. For example, mistake as to the law in Malaysia, contract become not voidable while mistake as to foreign law, an agreement will become void due to it will be treated as a matter of fact is essential to the agreement. As consequence, it applies section 21 of Contract Act.
Alhamdulillah, finally i am able to explain this topic as fast as i can. I hope you guys can understand and enjoy it.