Business Law: Contracts With Intoxicated Persons Research Paper

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The hypothetical client, Becky, has been forced to sign a contract under threat by a contractor called Ed. This occurred initially since Becky attended a meeting under the influence of alcohol and was also later threatened by Ed to sign a new contract promising him more money while Ed’s acquaintance prevented her from leaving. It is the client’s goal to rescind the contract, and she can do so in correspondence to the capacity to contract and duress and undue influence.

The intoxicated state of an individual, by way of either alcohol or drugs, has the potential to deprive a person of the capacity to contract. Intoxication that affects the client in such a way that they no longer have an understanding of the business proceedings of a contract voids their capacity to contract. According to Section 16 of the Restatement (Second) of Contracts, intoxication serves as the grounds for lack of capacity in the case that the second party was aware of the individual’s state (Langvardt et al., 2019). They would also have to be aware that they were unable to understand or make reasonable decisions concerning the contract. In the case of the client, while her memory is not complete, it cannot be stated definitively that she was not aware of the business proceedings. However, due to Ed’s further actions, it is clear that he was aware of Becky’s state by claiming her to have committed fraud.

Duress occurs in the case that an individual signs a contract under threat and without having alternative options. Due to the client’s inability to dispute Ed’s claims and the physical threat of his acquaintance, the client was unable to do anything but sign the new contract. Additionally, economic duress was present as Ed had threatened that the contract would not be closed in any other way, which would alter the career and earnings of the client. Undue influence has also occurred as Becky was under unfair and false persuasion, and Ed had both economic and physical control over Becky’s wellbeing.

Reference

Langvardt, A. W., Barnes, A. J., Prenkert, J. D., McCrory, M. A. & Perry, J. E. (2019). Business Law: The Ethical, Global, And E-Commerce Environment (17th e.d.). McGraw Hill Education.

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IvyPanda. 2022. "Business Law: Contracts With Intoxicated Persons." November 22, 2022. https://ivypanda.com/essays/business-law-contracts-with-intoxicated-persons/.

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IvyPanda. "Business Law: Contracts With Intoxicated Persons." November 22, 2022. https://ivypanda.com/essays/business-law-contracts-with-intoxicated-persons/.

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