Donald, a person clinically-diagnosed with schizophrenia, signed a contract with Joe, a jeweler, to buy diamond-encrusted cuff links for $1,000. The price for these cuff links were considered fair given their quality and craftsmanship. When they signed the contract, Donald acted and talked like a normal person of sound mind. Later on, however, Donald claimed that Joe cheated him and refused to accept the cuff links or pay for them.

Joe comes to you for advice. He wants to know if he can sue Donald for damages for breach of contract from Donald.

Explain your answer with specific focus on the issue of Donald's capacity to enter into contract and whether a valid contract exists between him and Joe.