Question

Jamal has been the owner of a car dealership for 10 years. One day, Jamal sold one of his most expensive cars to Abdul. At the time of the sale, Jamal thought Abdul acted in a peculiar manner, but he gave the matter no further thought until four months later when Abdul's court-appointed guardian appeared in Jamal's office, returned the car, and demanded Abdul's money back. The guardian informed Jamal that Abdul had been adjudicated mentally incompetent two months earlier by a prior court.

A. Discuss the rights of the parties in this situation?

B. If Abdul had been adjudicated mentally incompetent before the contract was formed, what would be the legal effect of the contract?

Answer 1

As per Indian Contract Act (If not in India, then also all country's relevant contract act contains these provisions), any agreement entered with a person who is mentally incompetent declared by a competent law, is said to be a contract entered by Undue Influence. All such contracts are void ab initio and can not be challenged in court of law for its validity.

Rights of Abdul's guardian

- Since the contract is void, thus the payment of the car can be asked back.

- If Jamal dont agree, then can challenge the same in court of law.

Rights of Jamal

- To get the car back in right condition before paying back the money to Abdul's guardian

- Claim damages for the use of car for four month's from guardians

PS: It is always better to have wittness while entering into any contract, as later that can help in court of law in case one party founds to be incompetent to enter into contract, Witness can in such cases proof & give statement in court of law about the capability of the person at the time of entering into contract.