Indian Contract Act, 1872
12. What is a sound mind for the purposes of contracting
A person is said to be of sound mind for the purposes 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) A patient in a lunatic asylum who is at intervals of sound mind, may contract during those intervals.
(b) 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 of drunkenness lasts.