What is a sanity clause? -

He's this fat jolly guy that normally comes around Christmas. Seriously though... it's a clause in a contract that would render the contract invalid if one of the parties became insane. Ah, come on. Everyone knows there's no such thing as Sanity Clause. :) What you want to know about that? It's found in certain contracts. Usually it says something to the effect that if you become insane then you can't be party to the contract anymore, and might specify how this affects the terms of the contract and/or who will handle these matters if you can't. In most states this is redundant with existing laws and precedent, so - with apologies to Mr. Marx - in most cases today there really is no sanity clause.