I can understand the mental illness question as this could have direct bearing on the safety of the dog and on the ability of the family to properly care for it. So that could be a legitimate concern of the breeder, especially if they had a bad experience in the past.
I don't agree with putting stipulations such as food, training equipment, etc... in the contract. To me that is too restrictive. Once the puppy goes home, it is no longer the breeder's dog, it is the owner's dog. If the breeder is that concerned about food and training it would IMO be better to thoroughly discuss those things with potential buyers upfront and then only sell to those who are like minded in those respects rather than trying to force people to do things that they aren't comfortable with or knowledgeable about just to keep their warranty intact.