Section 22

Section 22 of the Indian Contract Act, 1872, provides that a contract is not voidable merely because it was entered into under a mistake by one party as to a matter of fact, unless the other party at the time the contract was made was aware that the first party was acting under a mistake and the first party would not have entered into the contract but for the mistake. The section states, '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, unless the fact was one which the party alleging the mistake could, with reasonable diligence, have ascertained.' The court in the case of Shri Ram Narain v. The Simla Banking and Industrial Co. Ltd. observed that a contract entered into under a mistake of fact is voidable at the option of the party who was mistaken, if the other party knew or had reason to believe that the first party was acting under a mistake.