Question

Certain legal principles and specific factual situations are provided in each of the following questions. Apply the principles to the given facts and select the most appropriate answer.
LEGAL PRINCIPLE : In relation to the law of contracts, in instances where both parties to an agreement are under a mistake about a matter of fact essential to the agreement, the agreement is void.
FACTUAL SITUATION : Lakshman agrees to sell to Manu a consignment of herbal products which was supposed to be on a ship on its way from Madagascar to Mumbai. However, two days before the agreement was reached, the ship carrying the products met with an accident and all the goods were lost. Lakshman’s agent had informed Lakshman about this on the day the accident happened. Is the agreement void because of a mistake as to a matter of fact ?

• A. Yes, since both parties committed a mistake by entering into the contract
• B. No, since Lakshman had dishonest intentions
• C. No, since Lakshman was aware that the goods were lost
• D. None of the above

Answer 1

Answer: (C)

No, since Lakshman was aware that the goods were lost

Answer 2

The correct option is (C): No, since Lakshman was aware that the goods were lost.