Sections 20-22 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 20, 21 and 22 deal with mistake, the fifth factor in section 14. Section 20 says an agreement is void where both parties are under a mistake as to a matter of fact essential to it. Section 21 says a contract is not voidable because of a mistake as to a law in force in India. Section 22 says a contract is not voidable merely because one party was under a mistake of fact.
Section 20: where both parties are under a mistake as to a matter of fact essential to the agreement, the agreement is void; an erroneous opinion as to value is not a mistake of fact. Section 21: a contract is not voidable because of a mistake as to any law in force in India; a mistake as to a law not in force in India has the same effect as a mistake of fact. Section 22: a contract is not voidable merely because one party was under a mistake of fact.
How the three sections fit
| Section | Whose mistake | About what | Effect stated |
|---|---|---|---|
| 20 | Both parties | A matter of fact essential to the agreement | Agreement void |
| 21 | (Either) | A law in force in India | Contract not voidable |
| 21 | (Either) | A law not in force in India | Same effect as a mistake of fact |
| 22 | One party | A matter of fact | Contract not voidable merely because of it |
Section 14 lists mistake among the factors that can make consent not free, "subject to the provisions of sections 20, 21 and 22". These three sections therefore decide when mistake matters. See our article on section 14. If you think a deal was made on a shared wrong assumption, our legal consultation service can help you apply these sections to the facts.
Section 20: both parties under a mistake of fact
"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."
Elements:
- Both parties are under the mistake.
- It is a mistake as to a matter of fact.
- The fact is essential to the agreement.
The effect is that the agreement is void, not merely voidable.
The Explanation: value is not a fact
"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 wrong view about what something is worth does not trigger section 20.
The Act's illustrations to section 20
(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 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.
In each, the thing the contract was about no longer existed when it was made, and neither side knew.
Section 21: mistake as to law
"A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact."
Two parts:
- A mistake about a law in force in India does not make the contract voidable.
- A mistake about a law not in force in India is treated like a mistake of fact; so section 20 or 22 would apply, depending on whether both or one party made the mistake.
The text's footnotes record that a second paragraph (inserted by an Order of 1937) was repealed in 1950, and that the second illustration was repealed by Act 24 of 1917. We do not discuss the repealed text.
The Act's illustration to section 21
A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation. The contract is not voidable.
Section 22: one party's mistake of fact
"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 contrast with section 20 is the number of parties. Where only one party is mistaken, the contract is not voidable merely because of that. The word "merely" matters: the section says a one-sided mistake alone is not enough, and it does not rule out the effect of other sections, such as section 18 where the other party caused the mistake. Section 18's third limb covers causing, however innocently, a party to make a mistake as to the substance of the thing; see our article on section 18. The text of section 22 does not itself say more.
A modern example (ours, not the Act's)
Harish agrees to buy a particular consignment of 500 cartons of tea stored at a named warehouse, from Neelam. Unknown to both, the warehouse was destroyed in a fire the day before the contract. Both are under a mistake as to a matter of fact essential to the agreement: the goods no longer exist. Under section 20, the agreement is void, as in the Act's illustration (a) with the lost cargo.
Change it. The tea exists, but Harish thinks the market price is going up and so pays a high price; Neelam does not share his view. His view is an erroneous opinion as to value, which the Explanation says is not a mistake of fact. Or suppose Harish alone wrongly believes the tea is of a premium grade and Neelam has made no statement to that effect: section 22 says the contract is not voidable merely because of his mistake. And if both parties wrongly believe that a certain Indian regulation lets them sell the tea without paperwork, section 21 says the contract is not voidable because of the mistake as to a law in force in India.
What can the parties change?
These sections state the effect of mistake; the parties cannot agree that a void agreement under section 20 is valid by saying so. They can reduce the risk by verifying the facts before contracting, by stating the essential facts as terms of the agreement, and by saying who bears the risk if the facts turn out to be different. Whether such a risk clause works depends on the wording and on law outside these sections.
Practical points
- Confirm the subject-matter exists. Before paying for specific goods or rights, check that they exist and are what you think.
- Do not confuse value with fact. A wrong view about price or worth is not a mistake of fact under section 20.
- Check Indian law carefully. Section 21 means ignorance of Indian law is not a ground to avoid.
- Look to other sections if the other side caused it. A one-sided mistake caused by a misleading statement may fall under sections 17, 18 and 19.
Need help with a deal built on a wrong assumption?
If you and the other side both assumed a fact that turned out to be wrong, or you made a unilateral mistake and want to know where you stand, our legal consultation team can review the contract and the facts and explain how sections 20 to 22 may apply.
Key takeaways
- If both parties are under a mistake as to a matter of fact essential to the agreement, the agreement is void (s.20).
- An erroneous opinion as to value is not a mistake of fact (s.20, Explanation).
- A mistake as to a law in force in India does not make a contract voidable; a mistake as to a law not in force in India is treated like a mistake of fact (s.21).
- A contract is not voidable merely because one party was mistaken as to a matter of fact (s.22).
Read next
- Section 19: voidable agreements
- Section 23: lawful consideration and lawful object
- Section 14: when consent is valid and when it is not
- Free consent: sections 13 to 22
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.