LUNATIC.

UNSOUND MIND.

Lack the capacity to make a binding contract.

Person must be so mentally infirm or deranged.

Lunacy, mental retardation, senility, alcohol or drug abuse are irrelevant.

For a contract to be considered valid and enforceable, the parties must have the legal ability to bind themselves to the agreement.

Incapacity is an exception, not a rule.

Burden of proof regarding incapacity falls on the party raising it as a defence to enforce the contract or as basis for recession of the contract.

Law determines contractual capacity by looking at the relative bargain power of the parties.

Issues of contractual capacity can arise if contract involves minors, persons lacking mental capacity, aliens, convicts, and in some states-married women.

Contracts made by these people may be absolutely void, voidable (in case of insane), or valid (if lucid when contract was formed).

Machaiman v. Usman Boari(1907) 17 Mad LJ 78

Chacko v. Mahadevan (2007) 7 SCC 363, AIR 2007 SC 2967.

Jyotirindra Bhattacharjee v. Sona Bala Bora AIR 1994 Gau 99