This Section 12 of the Indian Contract Act, 1872 which talks about the test of soundness of mind. It tells that there must be existence of soundness at the time of the making of the contract.
This section 12 –‘What is a sound mind for the purposes of contracting’ read as “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.
- A patient in a lunatic asylum, who is at intervals of sound mind, may contract during those intervals.
- A sane 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 interests, cannot contract whilst such delirium or drunkenness lasts.”
The test of unsoundness of mind is whether the person is incapable of understanding the business concerned and its implication. For a valid contract, the test of soundness of mind must be satisfied at the time the contract is made [Tilok Chand Charan Das v Mahandu AIR 1933 Lah 458].
There is always a confusion whether weakness or loss of memory will come under this category of Section 12.
- Mere weakness of mind is not unsoundness of mind [Kanhaiyalal v Harsing Laxman Wanjari AIR 1944 Nag 232 ].
- Nor does mere loss of memory make a person unfit for management of his own affairs in his lifetime. [ Rajkumar Sen Chowdhury v Ram Sundar Shaha AIR 1932 PC 69].
- Questions of undue influence and of incapacity by reason of unsoundness of mind involve totally different issues [Ram Sunder Saha v Kali Narain Sen Choudhury AIR 1927 Cal 889].
- A person, though he may apparently be of sound mind, may still be incapable of understanding the nature of the transaction or to judge whether it is to his benefit or not. To such a person, the principles applicable to a pardanashin lady will apply. A man incapable of judging the consequences of his act should not be held to be bound by his contract. [ Indar Singh v Parmeshwardhari Singh AIR 1957 Pat 491].