Indian Contract Act, 1872 · Chapter II: Of Contracts, Voidable Contracts and Void Agreements
Section 20: Agreement void where both parties are under mistake as to matter of fact
In plain words
If both parties are mistaken about a fact essential to the agreement, the agreement is void.
- A wrong opinion about the value of the thing is not a mistake of fact.
Example: A agrees to sell B a horse, but unknown to both, the horse was already dead. The agreement is void.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
Official text
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.
Illustrations
(a) A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay. 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 these facts. The agreement is void.
(b) 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.
(c) 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.
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.
Supreme Court judgments citing the section 20
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M/s ABCI Infrastructures Pvt. Ltd. v. Union of India and Others
Whether BRO-Border Road Organisation was justified in accepting the bid of Rs.1,569/-, and on the failure of the appellant-L1 bidder to execute the agreement asking for forfeiture vide encashment of bank guarantee of…
- M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
- Loop Telecom and Trading Limited v. Union of India and Anr.
- M/S. Kailash Nath Associates v. Delhi Development Authority & Anr.
- Enercon (India) Ltd. & Ors. v. Enercon Gmbh & Anr.
- Itc Ltd. v. State of Uttar Pradesh & Ors.
- Ganga Retreat and Towers Ltd. and Anr. v. State of Rajasthan and Ors.
- Government of Maharashtra v. M/S. Deokars Distillery
- Union of India and Ors. v. R.P. Yadav Etc.
- Sri Tarsem Singh v. Sri Sukhminder Singh