Presumably the rationale of one party serving notice on the other party of effectively an intention to revoke or change a “mutual will” is to then relieve the receiving (and of course the serving) person from the agreement not to revoke their will.
In other words, X has said he does not wish to any longer to be bound by the agreement with Y re their mutual wills which then allows or gives the option to Y to also change their will if they so chose.
Thus, if Y in the above example lacks capacity then Y, even having received notice, is unable to change their will.
I’m unaware of any authority in such circumstances but it would (at least to a layman) seem grossly unfair to allow X to resile from their agreement. On the other hand, why should X be bound just because of Y’s subsequent unfortunate change of circumstances.
I assume nothing in the original agreement provided for such circumstances.
Does the length of time between original agreement and wills execution and the subsequent serving of notice have any relevance ie the longer this length of time the more likely X could revoke successfully.
Another reason why mutual wills are a disaster.