by Under the Indian Contract Act, 1872, Section 11 says that a person is competent to contract if they are of the age of majority, of sound mind, and not disqualified by law. A person of unsound mind is someone who cannot understand the nature and consequences of the contract they are entering into. As a result, contracts entered into by such persons are considered void.
The term “unsound mind” includes various mental states, such as lunacy, idiocy, intoxication, or any condition where the person cannot comprehend the contract. For example, a person suffering from temporary insanity, or someone drunk or drugged at the time of making the agreement, is considered of unsound mind for that specific period.
A crucial point is that a person of unsound mind is not permanently disqualified from contracting. The test applied is whether the person was of sound mind at the exact time the contract was made. If a generally insane person makes a contract during a lucid interval (a period when they are temporarily sane), that contract is valid. Conversely, if a generally sane person makes a contract during a period of insanity or intoxication, the contract is void.
The law aims to protect persons of unsound mind because they cannot properly assess the risks and benefits of contractual obligations. Courts usually look at evidence to determine the person’s mental state at the time of contracting.
However, just like in the case of minors, contracts for necessaries (such as food, clothing, shelter, or medical care) supplied to a person of unsound mind are enforceable, but only against their property, not against them personally. This ensures that those who supply essential goods and services are not unfairly burdened.
Examples of Persons of Unsound Mind:
The Indian Contract Act, 1872 recognizes that certain people lack the mental ability to form valid contracts. Let’s look at some common examples of persons of unsound mind:
- Lunatics (or mentally ill persons)
A lunatic is someone who has periods of insanity and sanity. For example, a person suffering from bipolar disorder or schizophrenia may experience lucid intervals where they understand things clearly. During these intervals, they can make valid contracts, but agreements made during insane periods are void.
- Idiots (permanent mental incapacity)
An idiot is someone who has had mental incapacity since birth and lacks the ability to understand or reason. Such persons are permanently incapable of entering into contracts because they can never grasp the nature or consequences of the agreement. Any contract with an idiot is void.
- Intoxicated persons (drunk or drugged)
A person who is under the influence of alcohol or drugs at the time of making the contract and is unable to understand its meaning is treated as a person of unsound mind. For example, if someone signs a sale deed while heavily drunk, that agreement can be voided because the person lacked the mental capacity at that moment.
- Persons under hypnotic influence
Though less common, someone who is under hypnosis and makes an agreement during that altered state is also considered of unsound mind, as they are not acting with free will or proper understanding.
- Temporary insanity due to illness or trauma
Sometimes, a normally sane person may experience a mental breakdown or trauma-induced insanity, making them incapable of contracting during that period. For instance, someone suffering from a sudden nervous breakdown or trauma after an accident may be legally treated as unsound for contracts made in that condition.
Natures of Unsound Mind:
- Idiocy
Idiocy refers to a permanent and incurable mental defect present from birth. An idiot never possesses the capacity to understand or reason, no matter their age or physical maturity. Such a person has no understanding of the consequences of their actions or the ability to form rational judgments. Under contract law, agreements made by an idiot are void from the beginning because they lack legal capacity. Courts do not require additional proof of mental state at the time of the agreement, as the condition is continuous and permanent. Contracts involving idiots offer no legal enforceability.
- Lunacy
Lunacy, or insanity, refers to mental illness that occurs after birth and is often intermittent. A lunatic may have alternating periods of sanity (lucid intervals) and insanity. Contracts entered into during a lucid interval are valid and binding because the person can understand and judge their actions. However, contracts made during insane periods are void, as the person lacks the mental capacity to comprehend the terms. Courts carefully examine the mental condition at the time the agreement was made. If the party was insane at that moment, the contract cannot be enforced, even if the other party acted in good faith.
- Intoxication
Temporary intoxication due to alcohol, drugs, or other substances can impair a person’s mental capacity. If the intoxication is so severe that the person cannot understand the nature or consequences of their actions, any contract made during that period is voidable. However, mild intoxication generally does not count, as the person retains enough awareness to contract. The key is whether the intoxicated individual could understand the contract and make rational decisions at the time. The burden often lies on the intoxicated party to prove they were incapable of understanding when they entered the agreement.
- Hypnosis or Delirium
A person under hypnosis or suffering from delirium due to fever, hallucination, or drugs may be considered temporarily of unsound mind. In such states, they lose control over their mental faculties and cannot comprehend the meaning or consequences of contracts they enter. Contracts made under such conditions are considered void, as the person lacks free consent. Courts require proof that the hypnotic or delirious condition existed at the time of the agreement. If the other contracting party knew or should have known of the unsound condition, they may be held responsible.
- Mental Derangement from Trauma or Illness
Mental derangement can result from sudden trauma, severe shock, or illness, temporarily affecting a person’s ability to think clearly. Even if a person is generally sane, they may become incapable of contracting if suffering from such mental derangement. For example, a person who has recently suffered a major emotional shock or a nervous breakdown might be unable to understand the consequences of their actions. Contracts entered into during this period are considered void. The mental capacity is judged strictly at the moment of contract formation, not before or after.
- Senility or Old Age Dementia
Senility, often seen in elderly individuals, refers to mental decline due to aging. Conditions like dementia or Alzheimer’s disease can impair memory, judgment, and understanding. A senile person may appear physically normal but lack the mental ability to make rational decisions or understand contract terms. Agreements made by such individuals are void if they cannot grasp the nature and impact of their actions. Courts assess whether the individual was capable of understanding the contract at the time it was signed, focusing on the degree of cognitive decline present at that moment.
- Burden of Proof and Legal Test
The law places the burden of proof on the party claiming unsoundness. That means if someone argues they lacked mental capacity when making a contract, they must provide medical evidence, witness testimony, or behavioral proof showing their incapacity. Courts use objective legal tests to decide if the person understood the terms and consequences at the moment of contracting. Even in cases of lunacy or intoxication, it is not enough to claim general incapacity; it must be proven specifically for the moment when the contract was made. This ensures fairness for both parties.
