<P> Mistake can be - (1) Mistake of Law; or (2) Mistake of Fact </P> <P> Mistake of law: when a party enters into a contract, without the knowledge of the law in the country, the contract is affected by such mistakes but it is not void . The reason here is that ignorance of law is not an excuse . However, if a party is induced to enter into a contract by the mistake of law then such a contract is not valid . </P> <P> Illustration: Harjoth and Danny 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 . </P> <P> Mistake of Fact: Where both the parties enter into an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void . </P>

When one party is mistaken as to a material fact it is called a bilateral mistake