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15 of 63 DOCUMENTS: Carter on Contract/Part IV -- Parties to the Contract/Chapter 16 Capacity/3. MENTALLY DISABLED AND INTOXICATED PERSONS 3. MENTALLY DISABLED AND INTOXICATED PERSONS
General principles: (1) A contract is voidable on the basis of mental incompetence arising from unsoundness of mind or intoxication if: (a) the defendant lacked capacity to contract; and (b) the plaintiff knew of the unsoundness of mind or intoxication. Lack of capacity to contract in relation to a transaction due to unsoundness of mind or intoxication is present where it is established that the defendant: (a) was not capable of understanding the general nature of what he or she was doing by participation in the transaction; or (b) did not have the capacity to understand the transaction if it was explained. A mentally incompetent person must pay a reasonable price for necessaries supplied. `Necessaries' are goods or services suitable to the condition in life of the mentally incompetent person, and to that person's actual requirements at the time of the sale and delivery or supply.
[16-350] Bird's eye view The same principles govern both mental disability and intoxication by alcohol or other drugs. Accordingly, cases involving mental disability and drunkenness will be cited without distinction. 1. The concern is with the circumstances in which a contract may be found binding notwithstanding the presence of an element of mental disability or intoxication. 2. The primary concern is not with persons in respect of whom there has been a finding under the relevant (mental health) legislation that they are incapable of managing their property and affairs, control and management of which have been vested in a committee or official. The general scheme of such legislation is that so long as the management and control continues, the committee or official has defined powers (including power to carry out contracts and to make contracts) in relation to the property and affairs of the person and he or she has none. Accordingly, such a person's contracts are null and void and the court will not inquire whether he or she contracted during a lucid interval. 3. In cases where contractual capacity is found to be absent there remains the possibility of a liability for necessaries supplied. 4.
1. For cases in which the plea of non est factum is available see [22-500]-[22-560] . 2. It is not vital for present purposes to choose between such expressions as `insanity', `lunacy', `mental illness', `mental disability' or `mental incapacity'. The legal threshold for contractual assent has been laid down in other terms. See [16-001] , [16-360] . 3. See Re Walker (a lunatic so found)  1 Ch 160 ; Re Marshall; Marshall v Whateley  1 Ch 284 ; Re Barnes (a protected person)  1 VR 605 . 4. See [16-440] . Compare [16-080]-[16-140] .
[16-360] General principle The general principle developed under the common law was that persons (not being `found' or `certified' as insane) were not allowed to `stultify' or `disable' themselves, that is, to escape responsibility for acts by setting up their own mental incapacity or drunkenness. 1. However, unsoundness of mind and intoxication are under the modern law good defences to an action to enforce a contract, so long as it can be shown that: 2. (1) (2) the defendant was not of capacity to contract; and the plaintiff knew it.
The two elements of contractual incapacity on the ground of mental disability (including disability arising from intoxication by alcohol or other drugs) are therefore: (1) (2) the necessary degree of influence on the mind; 3. and knowledge thereof in the other party. 4.
1. See Beverley's Case (1603) 4 Co Rep 123b; 76 ER 1118 . 2....