Voluntary Intoxication – Drugs and Alcohol
Courts generally do not find lack of capacity to contract for people who are voluntarily intoxicated. The
rationale for this decision is found in the reasoning that individuals should not be allowed to side-step their
contractual obligations by virtue of their self-induced states. By another token, however, courts also seek to
avoid the undesirable result of allowing the sober party to take advantage of the other person’s condition.
Therefore, if a party is so inebriated that he or she is unable to understand the nature and consequences of
the agreement, then the contract may be voided by the inebriated party.
Legality
Contracts must be created for the exchange of legal goods and services to be enforced. An agreement is void
if it violates the law, or is formed for the purpose of violating the law. Contracts may also be found voidable if
they are found violative of public policy, although this is rarer. Typically, this conclusion is only invoked in clear
cases where the potential harm to the public is substantially incontestable, eluding the idiosyncrasies of
particular judges.
For a contract to be binding, it must not have a criminal or immoral purpose or go against public policy. For
example, a contract to commit murder in exchange for money will not be enforced by the courts. If performing
the terms of the agreement, or if formation of the contract, will cause the parties to engage in activity that is
illegal, then the contract will be deemed illegal and will be considered void or “unenforceable,” similar to a
nonexistent contract. In this case, there will not be any relief available to either party if they breach the
contract. Indeed, it is a defense to a breach of contract claim that the contract itself was illegal.
agreement. He, therefore, sought to have the contract voided. Williams based his claim on the fact that he
had been diagnosed as manic-depressive and had received treatment from a variety of mental hospitals for
this condition. His doctor stated that he was unable to properly evaluate business opportunities and
contracts while in a “manic” state. A California Court of Appeals, evaluating a similar situation, refused to
terminate the contract and stated that even in his manic state, the party was capable of contracting, as his
condition may have impaired his judgment but not his understanding of the contract. With other mental
conditions, a different legal conclusion could be reached.
E X A M P L E  7 . 4
In the late 1900s, the owner of a significant amount of stock went on a three-month drinking binge. A local
bank that was aware of his consistent inebriation hired a third party to contract with him. The third party
succeeded in getting him to sell his stock for about 1.5% of the worth of its total value. When the duped
seller ended his binge a month later, he learned that the third party had sold the stock to the local bank
behind the deal. He then sued the third party. Ultimately, the case was decided by the U.S. Supreme Court,
which found that the agreement was void because both the bank and the third party knew that the plaintiff
was unaware of what he was doing when he entered the contract. The bank was required to return the
shares to the plaintiff, minus the 1.5% amount of real value that he had been paid for the shares.
Chapter 7 Contract Law
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