Indian Contract Act Section 12 — What is a sound mind for the purposes of contracting
CHAPTER II OF CONTRACTS, VOIDABLE CONTRACTS AND VOID AGREEMENTS
Commercial / Corporate
Summary
A person is considered to be of sound mind for making a contract if, at the exact time they make it, they are able to understand the contract and form a rational judgment about how it will affect their own interests.
A person who is generally of unsound mind, but has occasional periods of sound mind, is allowed to make a contract during those periods when they are of sound mind.
A person who is generally of sound mind, but has occasional periods of unsound mind, is not allowed to make a contract during those periods when they are of unsound mind.
The illustration clarifies that a person who is in a state of delirium or drunkenness, and therefore cannot form a rational judgment about how the contract affects their interests, is not able to contract while that condition lasts.
Official Text
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 judgment as to its effect upon his interests. A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind. A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind. Illustrations rational judgment as to its effect on his interests, cannot contract whilst such delirium or drunkenness lasts.