Introduction
The Indian Contract Act, 1872 lays down essential conditions for entering into a valid contract. One such requirement is that the parties must be competent to contract. Among those deemed incompetent are persons of unsound mind. Understanding who qualifies as unsound and how their contracts are treated legally is crucial for ensuring fairness and legal compliance in contractual dealings.
Main Body
Who are Persons of Unsound Mind?
According to Section 12 of the Indian Contract Act, a person is said to be of sound mind if, at the time of making the contract, he is capable of:
- Understanding it
- Forming a rational judgment as to its effects on his interest
Hence, a person of unsound mind is one who cannot understand the nature and consequences of the contract due to mental incapacity. Such conditions include:
1. Idiots
Persons born with permanent mental incapacity. They are never competent to contract.
2. Lunatics
Individuals who suffer from intermittent periods of sanity and insanity. Contracts made during periods of insanity are void, while contracts during lucid intervals are valid.
3. Drunken or Intoxicated Persons
If a person is so intoxicated that they cannot understand the contract or make rational judgments, they are deemed of unsound mind during that time.
Legal Position of Contracts with Unsound Persons
1. Void Contracts
Contracts with persons of unsound mind are generally considered void, as the individual lacks the legal capacity to understand the agreement.
2. Contracts During Lucid Intervals
If a person normally unsound regains mental stability, contracts made during those intervals are valid.
3. Contracts for Necessaries
As per Section 68 of the Indian Contract Act, a person of unsound mind is liable for the cost of necessaries supplied to them or to those dependent on them, but not under a contract. The payment is made from their property, not personally.
Key Judicial Decisions
- Inder Singh v. Parmeshwardhari Singh: A lunatic’s sale deed was declared void due to lack of soundness at the time of execution.
- Kanhaiyalal v. Harsingh: Reinforced the validity of contracts during lucid intervals.
Precautions for Valid Contracts
- Proper documentation of the mental state at the time of contract
- Medical certification for individuals with known mental illness
- Witnesses to attest to the person’s state of mind
Conclusion
Contracts made by persons of unsound mind are void unless made during lucid intervals or involve necessaries. The law aims to protect such individuals from exploitation while ensuring fairness to those transacting with them. Due diligence, proper legal advice, and documentation are essential when entering contracts involving individuals with questionable mental capacity.