As stated earlier, as per Section 11 of the Contract Act, for a valid contract, it is necessary that each party to it must have a ‘sound mind’.

Meaning of Sound Mind? Section 12 of the Contract Act defines the term ‘sound mind’ as follows: “A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgement as to its effects upon his interests.”

According to this Section, therefore, the person entering into the contract must be a person who understands what he is doing and is able to form a rational judgement as to whether what he is about to do is in his interest or not. The Section further states that:

(i) “A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind.” Thus a patient in a lunatic asylum, who is at intervals of sound mind, may contract during those intervals.

ADVERTISEMENTS:

(ii) “A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind.” Thus, a same man, who is delirious from fever, or who is so drunk that he cannot understand the terms of a contract, or form a rational judgment as to its effect on his interest, cannot contract whilst such delirium or drunkenness lasts.

In Halsbury’s Laws of England, it is stated : “The general theory of the law in regard to acts done, contracts of unsound mind are generally deemed to be invalid; or in other words, (subject to exceptions), there cannot be a contract by a person of unsound mind.”

Unsoundness of mind may arise from: (a) Idiocy – It is God given and permanent, with no intervals of saneness. The mental powers of an idiot are completely absent because of lack of development of the brain; (b) Lunacy or Insanity –

It is a disease of the brain. A lunatic loses the use of his reason due to some mental strain or disease. Of course he may have lucid intervals of sanity, (c) Drunkenness – It produces temporary incapacity, till the drunkard is under the effect of intoxication, provided it is so excessive as to suspend the reason for a time and create impotence of mind; (d) Hypnotism – it also produces temporary incapacity, till the person is under the impact of artificially induced sleep; (e) Mental decay on account of old age, etc.

ADVERTISEMENTS:

In cases where the contract is sought to be avoided on any of the above grounds, the burden of proof lies on the party who sets up such a disability, but if unsoundness of mind is once established, the burden of providing a lucid interval is on him, who sets it up (Mohanlal vs. Vinayak).

Effects of agreements made by persons of unsound mind :

An agreement entered into by a person of unsound mind is treated on the same footing as that of minor’s and therefore an agreement by a person of unsound mind is absolutely void and inoperative as against him but he can derive benefit under it (Jugal Kishore vs Cheddu). The property of a person of unsound mind is, however, always liable for necessaries supplied to him or to any one whom he is legally bound to support, under Section 68 of the Act.