Sections 12-13 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 12 says what "sound mind" means when a person makes a contract, and what happens if the person's state changes from time to time. Section 13 defines "consent" as two or more persons agreeing upon the same thing in the same sense. Both sections feed into the conditions of section 10.
A person is of sound mind for contracting if, at the time he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests (s.12). One usually of unsound mind but occasionally of sound mind may contract when of sound mind; one usually of sound mind but occasionally of unsound mind may not contract when of unsound mind. Two or more persons consent when they agree upon the same thing in the same sense (s.13).
Section 12: the test is at the time of contracting
The first paragraph reads: "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 judgment as to its effect upon his interests."
| Element | What it requires |
|---|---|
| Timing | "at the time when he makes it" |
| Understanding | Capable of understanding the contract |
| Judgment | Capable of forming a rational judgment as to its effect upon his interests |
Both abilities are needed: understanding the contract, and judging its effect on one's own interests. The test is about capacity at the moment of contracting, not a general label on the person. Section 11 requires sound mind as one of the three conditions of competence; see our article on section 11. If you are unsure whether someone had capacity when they signed, our legal consultation service can help you look at the facts.
Intervals: the second and third paragraphs
- Usually of unsound mind, occasionally of sound mind. Such a person "may make a contract when he is of sound mind".
- Usually of sound mind, occasionally of unsound mind. Such a person "may not make a contract when he is of unsound mind".
These two paragraphs apply the time-of-contracting test to people whose condition varies. The Act does not say how the state of mind at the time is to be proved; that is a question of evidence and is outside the text.
The Act's own illustrations to section 12
Illustration (a). A patient in a mental asylum who is at intervals of sound mind may contract during those intervals.
Illustration (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 while that delirium or drunkenness lasts.
Notice what the second illustration shows: the section is not limited to long-term conditions. Temporary delirium or drunkenness can mean a person is not of sound mind at the time, if he cannot understand the terms or form a rational judgment. The test remains the same one in the first paragraph.
Section 13: what consent means
Section 13 is a single sentence: "Two or more persons are said to consent when they agree upon the same thing in the same sense."
Two phrases do the work:
- "the same thing": the parties must agree about the same subject-matter;
- "in the same sense": they must attach the same meaning to it.
Consent here is the meeting of minds on both the subject and its meaning. Section 13 itself does not go on to say what happens if there is no such agreement; the Act deals with failure of consent in sections 14 to 22, for instance mistake in sections 20 to 22. Our overview of free consent, sections 13 to 22 shows how the group fits together.
Section 13 only defines consent. It does not say consent is free. That comes in section 14, which says consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake. Section 10 requires "free consent", so the full path is: consent (s.13), free consent (s.14), competent parties (ss.11 and 12), and the other conditions.
Comparing the two sections
| Section 12 | Section 13 | |
|---|---|---|
| Subject | Capacity of a person | Agreement between persons |
| Test | Understand the contract and form a rational judgment, at the time | Agree upon the same thing in the same sense |
| Feeds into | Section 11 (competence) | Sections 10 and 14 (free consent) |
| Illustrations | (a) intervals of sound mind; (b) delirium and drunkenness | None in the text |
A modern example (ours, not the Act's)
Mohan, an elderly shop owner who is usually of sound mind, signs a contract to sell his shop. At the time, he is in a high fever and so confused that he cannot understand the terms or what the sale will mean for him. Under section 12, applying the Act's illustration (b) by analogy to illness, he may not be of sound mind at that time for the purpose of contracting, if he could not understand the terms or form a rational judgment. The facts at the time of signing decide.
For section 13: Ritu agrees to sell "the black Maruti" to Sameer. Ritu owns two black cars of that make and means the older one; Sameer thinks of the newer one. Both used the same words, but they did not agree upon the same thing in the same sense, so the definition of consent in section 13 is not met. How the Act then treats such a case is for the sections on mistake, which are outside this article.
What can the parties change?
Section 12 sets a test at the time of contracting; the parties cannot agree that an incapable person is capable. A person who is usually of unsound mind but is of sound mind at the moment is not barred by the section. Section 13 is a definition. Parties can reduce the risk of dispute by confirming in the agreement the subject-matter and key terms in clear words, and by recording that each party understood them.
Practical points
- Note the circumstances of signing. For major contracts with a person whose capacity is open to question, record the date and time, who was present, and the explanation of terms given.
- Do not contract with someone who is clearly unwell or intoxicated. The Act's illustration (b) shows why.
- Use clear descriptions. Identify goods, premises, dates and prices so that the parties agree upon the same thing in the same sense.
- Take advice if capacity is in doubt. The Act gives a test, but proving state of mind at a past moment is a matter of evidence.
Need help with a capacity or consent question?
If you suspect that a contract was signed when a party could not understand it, or that the parties never agreed on the same thing, our legal consultation team can review the documents and the circumstances and explain the position under the Act.
Key takeaways
- Sound mind means being capable, at the time of contracting, of understanding the contract and forming a rational judgment as to its effect on one's interests (s.12).
- A person usually of unsound mind may contract in lucid intervals; a person usually of sound mind may not contract while of unsound mind.
- Delirium from fever or drunkenness that prevents understanding is covered by the Act's illustration (b).
- Consent means agreeing upon the same thing in the same sense (s.13).
Read next
- Section 11: who is competent to contract
- Section 14: when consent is valid and when it is not
- Free consent: sections 13 to 22
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.