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CA Foundation · Business Laws · The Indian Contract Act, 1872

Tarun, a person of unsound mind, is under a court-appointed guardian's care. During a lucid interval he agrees to sell his plot to Kiran at a fair price. At the time of contracting he was capable of understanding the contract and judging its effect on his interests. What is the status of the contract?

The contract is valid. A person who is usually of unsound mind can validly contract during a lucid interval, if at that time he understands the contract and can judge its effect on his interests. Tarun met this test when he agreed to sell.

  1. AVoid, because a person of unsound mind can never contract
  2. BVoidable at Tarun's option, since he is under guardianship
  3. CValid, because a person usually of unsound mind may contract when sane at the time of making itCorrect
  4. DValid only if the guardian ratifies it afterwards

Explanation

A person who is usually of unsound mind may contract during a period when he is of sound mind, meaning able to understand the contract and judge its effect. Tarun satisfied this test at the time of contracting. Option A is wrong because the law looks at his state when the contract was made.

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