When a party does not understand the nature and consequences of the contract when the contract was created, it is considered incapable of working mentally. People who have been convicted as incompetent by a court and appointed by a legal guardian should be distinguished from those who are mentally incompetent but who have not been convicted in this way. A person declared incompetent in a court proceeding is not entitled to enter into a contract with another. Such a person is not in a position to accept a contract because the Tribunal found that it did not understand the obligations and effects of a contract. A contract entered into by such a person is non-agreeable and without legal effect. If there has been no assessment of mental incompetence, a contract entered into by an individual unable to act mentally is VOIDABLE by them. This means that the person can legally cancel the contract, making it unenforceable. However, an unsigned contract may be ratified by the incompetent person if the person regains his contractual capacity. For example, A executed a deed of sale, but before it could be registered, it took place during the insolvency proceedings. In these circumstances, the effect of sale and free trade is valid and binding for the parties. It is clear from the discussion above that only those responsible for the treaty are a great healthy spirit and are not disqualified by law. A person who is diagnosed with a person with a mental illness that prevents them from managing their own affairs may be found mentally incompetent by a court. When a person is found to be incompetent, a guardian is appointed to handle the person`s property and personal affairs.
Under contract law, a person who accepts a transaction is held liable for contractual obligations, unless they are legally incompetent. A person under the age of 18 or 21 (depending on the for) is not bound by the legal obligation to comply with the terms of a contract he has signed and is not responsible for the breach of contract. Public policy considers it desirable to protect an immature person from the responsibility of contracts that he or she must negotiate too inexperiencedly. Until a minor reaches the age of majority, many contracts he or she enters into can be cancelled.  Even if the contract is null and bad, the contract is enforceable if the minor ratifies it after reaching the age of majority, which means that it accepts the agreement.  Ratification may be implied in the circumstances.