Background and aim: Today, numerous cases of mental disorders have been identified that, in a way, affect human psyche. Some of these lead, more or less, to one’s inability to manage his/her financial affairs. Iranian judicial practice, however, treats all kinds of mental disorders in the same manner considering them lower than insanity. Legal logic doesn’t accept this practice. The aim of this research is to analyse the impact of different kinds of mental disorders on the afflicted persons’ financial dealings for promotion of justice and protection of the rights of individuals and society.

Method: The method of this research is descriptive and analytical that its idea was acquired from the review of Iranian civil code and courts decisions. Sources of article have been compiled by bibliotheca methods and by taking notes from jurisprudence and juridical books and professional books in psychology written by Iranians and non-Iranians authors.

Findings: Some cases of the identified mental disorders in psychiatry cause inability of those persons to manage their financial affairs. These cases which fall short of insanity are treated in law as lunacy provided to meet certain conditions precludes a person from entering into legal transactions. On the other hand, it seems that the present approach of Iranian legislature and courts that prohibits immatured persons from all financial dealings altogether needs to be revisited. This is because the intensity and extent of mental disorders bear on performing some kinds of financial transactions.

Conclusion: If the concept of mental maturity is considered relative, it will be more appropriate to decide each case of mental disorders separately, and to determine the striken’s incapacity accordingly.

Please cite this article as: Olfat N, Karami Z. Examination of Effectiveness of Mental Disorders on Financial Transactions. Iran J Med Law 2016; 9(35): 29-52.