Sankalp is a lunatic but he appears to be normal. Amit enters into an agreement of sale and purchased Sankalp's flat for ₹ 34 Lakhs, the market price of which is ₹ 54 lakhs. Examine the validity of agreement under the In

Section 10 of Indian Contract Act, 1872 requires competent parties for making an agreement enforceable. Section 11 and 12 of the Act read together say that person of unsound mind is incompetent to contract. A person of unsound mind is a lunatic. That is to say for the purposes of making contract, a person is of unsound mind if at the time when he makes the contract, he is incapable of understanding it and of forming rational judgment as to its effect upon his interests. A person of unsound mind cannot enter into a contract. A lunatic's agreement is therefore void. But if he makes a contract when he is of sound mind, i.e., during lucid intervals, he will be bound by it. 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 judgement as to its effect on his interests cannot contract whilst such delirium or state of drunkenness lasts. A person under the influence of hypnotism is temporarily of unsound mind. Mental decay brought by old age or disease also comes within the definition. Agreement by persons of unsound mind are void. But for necessaries supplied to a lunatic or to any member of his family, the lunatic's estate, if any, will be liable. There is no personal liability incurred by the lunatic. In Jugal Kishore v. Chcddu, (1903) I All. L.J 43 it was held if a contract entered into by a lunatic or person of unsound mind is for his benefit, it can be enforced (for the benefit) against the other party but not vice-versa. Significant inadequacy of consideration is a clear-cut indication of Sankalp's stage of lunacy at the time he entered into the agreement with Amit. Applying law and cases in the instant case, it can be held that agreement is not enforceable and void.