Question

Certain legal principles and specific factual situations are provided in each of the following questions. Apply the principles to the given facts and select the most appropriate answer.
LEGAL PRINCIPLE : 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 judgement as to its effect upon his interests.
FACTUAL SITUATION : Mr. Xiu who is actually of sound state of mind, but occasionally of unsound state of mind, enters into a contract with Mr. Yan when he was of unsound state of mind. Mr. Yan having come to know about this fact afterwards wants to file a suit against Mr. Xiu.
DECISION :

• A. Mr. Xiu cannot enter into contract because he is of unsound state of mind when he entered into contract.
• B. Mr. Xiu can enter into contract but the burden is on the other party to prove that he was of unsound state of mind at the time of contract.
• C. Mr. Xiu can enter into contract but the burden is on Mr. Xiu to prove that he was of sound state of mind at the time of contract.
• D. Contract with a person of unsound mind is void.

Answer 1

Answer: (C)

Mr. Xiu can enter into contract but the burden is on Mr. Xiu to prove that he was of sound state of mind at the time of contract.

Answer 2

The correct option is (C):Mr. Xiu can enter into contract but the burden is on Mr. Xiu to prove that he was of sound state of mind at the time of contract..