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Persons of unsound mind

According to Sec. 12 of the Indian Contract Act, “A person is said to be of sound mind for the purpose of making a contract, if at the time when he makes it, is capable-
  • To understand the terms of the contract
  • ƒTo form a rational judgment as to its effect upon his interests”
    Thus, if a person is not capable of both, he is said to suffer from unsoundness of mind. Such type of people can be categorised as:
  • ƒIdiots: An idiot is a person, who is of unsound mind by birth. His incapacity to be rational is permanent and therefore a contract with an idiot is void-ab-initio.

Note: Any agreement entered into by an idiot will be void and he is not liable thereon.

  • Lunatics: A lunatic person is one who is mentally disturbed due to some mental strain or other personal experiences. In this case, the unsoundness is not permanent. He can enter into a contract during lucid intervals i.e., during the period when he is of sound mind.

Note: A lunatic person cannot enter into a contract while he is of unsound mind and any agreement if entered, the lunatic will not be held liable. But, when a lunatic is of sound mind i.e. during lucid intervals, he can enter into a contract and can be held liable for such contracts.

  • ƒDrunkard: A drunkard is a person who is under the influence of alcohol or intoxicating substances. When he is drunk, he cannot understand the contract, therefore, cannot enter into a contract. Any agreement entered thereon will be void.

Note: If a drunkard is capable of understanding the terms of contract, he can enter into a contract. Therefore, he will be liable for such contracts.

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