Question:
Ajay and Vijay make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation: What, if any, is the effect on the contract?
Ajay and Vijay make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation: What, if any, is the effect on the contract?
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Be careful with the double negative: "not voidable" means the contract remains valid and enforceable.
The law does not allow parties to set aside a contract on the grounds of a domestic law mistake.
The law does not allow parties to set aside a contract on the grounds of a domestic law mistake.
Updated On: Jul 7, 2026
- The contract is voidable.
- The contract is not voidable.
- The contract is void.
- The contract is illegal being against public policy.
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The Correct Option is B
Solution and Explanation
Step 1: Understanding the Question:
The question asks about the legal status of a contract entered into by parties who are under a mistaken belief that a specific debt is barred by the Indian Law of Limitation.
Step 2: Key Legal Principles and Approach:
The effect of a mistake of law on the validity of a contract is governed by Section 21 of the Indian Contract Act, 1872.
We must apply the statutory rule of Section 21 regarding mistakes of laws in force in India.
Step 3: Detailed Explanation:
• Mistake of Law Rule: Section 21 (Paragraph 1) of the Indian Contract Act, 1872, states: "A contract is not voidable because it was caused by a mistake as to any law in force in India..."
• This is based on the foundational legal maxim ignorantia juris non excusat (ignorance of law is no excuse).
• Parties to a contract are presumed to know the prevailing domestic laws, and they cannot escape their contractual liabilities by claiming they misunderstood or were mistaken about the law.
• Applying the Rule: The Limitation Act, 1963 (and its preceding/succeeding limitation statutes) is a domestic law in force in India.
• An erroneous belief that a debt is barred by limitation is a mistake of Indian law.
• Therefore, under the express language of Section 21, the contract is "not voidable" because of this mistake.
• It remains fully valid and binding on both Ajay and Vijay.
• Thus, Option (B) is the correct answer.
Step 4: Final Answer:
According to Section 21 of the Indian Contract Act, 1872, a mistake of Indian law does not make a contract voidable, making Option (B) the correct answer.
The question asks about the legal status of a contract entered into by parties who are under a mistaken belief that a specific debt is barred by the Indian Law of Limitation.
Step 2: Key Legal Principles and Approach:
The effect of a mistake of law on the validity of a contract is governed by Section 21 of the Indian Contract Act, 1872.
We must apply the statutory rule of Section 21 regarding mistakes of laws in force in India.
Step 3: Detailed Explanation:
• Mistake of Law Rule: Section 21 (Paragraph 1) of the Indian Contract Act, 1872, states: "A contract is not voidable because it was caused by a mistake as to any law in force in India..."
• This is based on the foundational legal maxim ignorantia juris non excusat (ignorance of law is no excuse).
• Parties to a contract are presumed to know the prevailing domestic laws, and they cannot escape their contractual liabilities by claiming they misunderstood or were mistaken about the law.
• Applying the Rule: The Limitation Act, 1963 (and its preceding/succeeding limitation statutes) is a domestic law in force in India.
• An erroneous belief that a debt is barred by limitation is a mistake of Indian law.
• Therefore, under the express language of Section 21, the contract is "not voidable" because of this mistake.
• It remains fully valid and binding on both Ajay and Vijay.
• Thus, Option (B) is the correct answer.
Step 4: Final Answer:
According to Section 21 of the Indian Contract Act, 1872, a mistake of Indian law does not make a contract voidable, making Option (B) the correct answer.
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