Contract Drafting & Law Course Preview
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<p class="banner-heading-text-two-line"><span>Tarsem Singh v. Sukhminder Singh</span><br><span class="banner-sub-heading">Module I: Contract Law Essentials—Mistake</span></p>
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<p><span class="padded-dropcap">I</span>n <strong>Tarsem Singh v. Sukhminder Singh (1998) 3 SCC 471</strong>, the issue revolved around a mutual mistake of fact regarding the unit of measurement of agricultural land (Kanals vs. Bighas) and the corresponding area and price agreed upon in a sale agreement. The parties were not <em>ad idem</em> on these essential terms, rendering the contract void. The Supreme Court held that mutual mistake concerning an essential element, such as the subject matter or consideration, invalidates the contract. Consequently, specific performance was denied, and the petitioner was directed to refund the earnest money of ₹77,000 to the respondent.</p>
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<h2 style="text-align: center;">(1998) 3 SCC 471</h2>
<h2 style="text-align: center;">Tarsem Singh v. Sukhminder Singh</h2>
<p>The petitioner, who owned 48 kanals 11 marlas of agricultural land in village Panjetha, Tehsil and District Patiala, entered into a contract for sale of that land with the respondent on 20.5.1988 @ Rs. 24,000 per acre. At the time of the execution of the agreement, an amount of Rs. 77,000 was paid to the petitioner as earnest money. Since the petitioner in terms of the agreement although the respondent was ready and willing to perform his part of the contract, the latter, namely, the respondent filed the suit for specific performance against the petitioner which was decreed by the trial court. The decree was modified in appeal by the Additional District Judge who was of the opinion that the parties to the agreement, namely, the petitioner and respondent both suffered from a mistake of fact as to the area of the land which was proposed to be sold as also the price (sale-consideration) whether it was to be paid at the rate of per “Bigha” or per “Kanal”. The lower appellate court also found that the respondent was not ready and willing to perform his part of the contract. Consequently, the decree for Specific Performance was not passed but a decree for refund of the earnest money of Rs. 77,000 was passed against the petitioner. This was upheld by the High Court.</p>
<p>On appeal, the Supreme Court interpreted the effect and impact of “mistake of fact” on the agreement as follows:</p>
<p>“Contract” is a bilateral transaction between two or more than two parties. Every contract has to pass through several stages beginning with the stage of negotiation during which the parties discuss and negotiate proposals and counter-proposals as also the consideration resulting finally in the acceptance of the proposal. The proposal when accepted gives rise to an agreement. It is at this stage that the agreement is reduced into writing and a formal document is executed on which parties affix their signatures or thumb impression so as to be bound by the terms of the agreement set out in that document. Such an agreement has to be lawful as the definition of contract, as set out in Section 2(h) provides that “an agreement enforceable by law is a contract”. Section 2(9) sets out that “an agreement not enforceable by law is said to be void”. (Para 12)</p>
<p>The Court further observed as follows: </p>
<p>“‘Bigha’ and ‘Kanal’ are different units of measurement. In the Northern part of the country, the land is measured in some states either in terms of ‘Bighas’ or in terms of ‘Kanals’. Both convey different impressions regarding area of the land. The finding of the Lower Appellate Court is to the effect that the parties were not ad idem with respect to the unit of measurement. While the defendant intended to sell it in terms of ‘Kanals’, the plaintiff intended to purchase it in terms of ‘Bighas’. Therefore, the dispute was not with regard to the unit of measurement only. Since these units relate to the area of the land. Since these units relate to the area of the land, it was really a dispute with regard to the area of the land which was the subject-matter of agreement for sale, or, to put differently, how much area of the land was agreed to be sold, was in dispute between the parties and it was with regard to the area of the land that the parties were suffering from a mutual mistake. The area of the land was as much essential to the agreement as the price which, incidentally, was to be calculated on the basis of the area. The contention of the learned counsel that the ‘mistake’ with which the parties were suffering, did not relate to a matter essential to the agreement cannot be accepted.” (Para 24)</p>
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