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LEGAL PRINCIPLE : A person is said to be of sound mind for the purpose of making a contract if, at the…

Under s.12, a person who is usually of sound mind but occasionally of unsound mind may not make a contract when he is of unsound mind, so "Mr. Xiu cannot enter into contract…

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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 :

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Under s.12, a person who is usually of sound mind but occasionally of unsound mind may not make a contract when he is of unsound mind, so "Mr. Xiu cannot enter into contract because he is of unsound state of mind when he entered into contract."

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