Explanation:

- When both parties misunderstand the subject-matter of an agreement, it means there is no true consensus.

- Without mutual consent on the same thing in the same sense, a contract cannot be formed.

- Section 20 of the Indian Contract Act, 1872, states that an agreement is void when both parties are under a mistake as to a matter of fact essential to the agreement.

- Such agreements have no legal effect and are not enforceable.

- Option 1 (not void) is incorrect, as the agreement is not valid in law.

- Option 3 (voidable) is wrong since voidable contracts are valid until avoided, but a fundamental mistake makes it void from the beginning.

- Option 4 (valid) is incorrect, as the agreement lacks the necessary consensus.

Option:2 - void