One of the most essential elements of a valid contract is the competence of the parties to make a contract.Section 11 of the Indian Contract Act, 1872, defines the capacity to contract of a person to be dependent on three aspects; attaining the age of majority, being of sound mind, and not disqualified from entering into a contract by any law that he is subject to. Contract by a person of unsound mind: A person of unsound mind too, under the Indian Contract Act, incapable of entering into a contract. Although a contract by a person who is not of sound mind is void, such a person can enter into a valid contract during an interval of lucidity. If a person who is of unsound mind enters into a contract such a contract is voidable at his. option by establishing that: (i) He was too insane to understand the nature or effects of his acts. (ii) The other party was aware of his mental condition. By proving these facts the party escapes liability.