There must be a real understanding between the parties as to the contract they have entered into. Both must have had the same thing in mind. Although there have been offer and acceptance, the consent shown by them may not be real. There are five things which may deprive an agreement of reality of consent - mistake, misrepresentation, fraud, undue influence, force. They will not render the contract void, but only voidable.
(a) Mistakes are not usually important enough to overthrow a whole agreement. But where both parties think the subject matter of the contract exists but are wrong, then no contract can arise; and when they are mistaken as to the identity of the subject matter then the same thing is true. However, when both parties are mistaken as to the quality of an article the contract is usually not affected. If only one party is mistaken as to the quality of an article the contract is usually not affected. If only one party is mistaken the contract is still good if he was not deceived by the other party. This is not true where the nature of the contract is concerned. If A persuades B to sign a check by pretending that he is signing something else, B is not bound to pay A. And if B thought he was dealing with C, with whom he has been accustomed to deal, but whose business had been bought by A, then he is not bound on a contract with A, since everybody has a right to choose the people with whom he deals. When one party to a contract innocently misleads the other, the second party can refuse to do his part if he can show that he was justified in relying on the other's statement and that the statement was relied on by him and had resulted in injury or loss to him.
(b) Fraud is different from misrepresentation in the fact that one person has deliberately tried to deceive the other. A party can refuse to perform his part of a contract on the ground that the other party practiced fraud upon him if he can show (1) that he believed the other's statements; (2) that as a result of those statements he gave his consent to the agreement; (3) that he has suffered as a result of the fraud.
(c) Undue influence is a wrong use of power over somebody else's will which causes that person to make contracts or gifts that otherwise he would not have made. Superior intellect is frequently used for this purpose.
(d) Force consists in actual or threatened force to another if he does not do some particular thing. The person making an agreement, when forced to do so by the threats of another that he will injure his body or his property, may afterward repudiate the contract.