Contracts Act 1950 · Updated to 1 Jan 2006 · Part III · Of Contracts, Voidable Contracts and Void Agreements
21. Agreement void where both parties are under mistake as to matter of fact
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If both parties to an agreement are mistaken about a fact essential to it, the agreement is void. A wrong opinion about the value of the thing the agreement is about is not a mistake of fact. For example, an agreement to buy a horse is void if the horse was already dead and neither party knew.
Summary · Drafted with AI, checked against the official text on 30 Sep 2026.
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.
Explanation—An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement is not to be deemed a mistake as to a matter of fact.
A agrees to sell B a specific cargo of goods supposed to be on its way from England to Kelang. It turns out that, before the day of the bargain, the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of the facts. The agreement is void.
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.
A, being entitled to an estate for the life of B, agrees to sell it to C. B was dead at the time of the agreement, but both parties were ignorant of the fact. The agreement is void.