Case C Topic:

Capacity to Contract

CAPACITY TO CONTRACT Public policy dictates that, in general, persons under the age of majority, persons with mental disabilities, and persons impaired by alcohol or drugs may be unable to appreciate the nature of contractual obligations Contracts they enter may not be enforceable against them; for example, impaired persons who immediately repudiate a contract upon becoming sober and show that the other party should have realized their lack of capacity may avoid obligation under a contract

*Background:

Jun attended a reunion with some old classmates at their friend Imani's house, five years after they graduated from college together. Jun had a few drinks while talking with Ted, an old friend from his Business Law class.

Ted was excited to show Jun pictures of his boat named Cryp to current. Ted said that he had been sailing around the world with it in recent months, but wanted to upgrade to a larger boat, so he was looking for a buyer for Cryptocurrent. His asking price was 1 Bitcoin (BTC). He showed the contract to Jun, who said, "Wow! I'd love to buy it, but I only have one Bitcoin that I'm keeping as a long-term investment."

Jun was feeling hungry and lightheaded, as he hadn't eaten since breakfast, so he excused himself to the kitchen. Inside the refrigerator, he found what appeared to be a chocolate brownie. Thinking no one wanted it, he ate the brownie, then opened another beer, and returned to his conversation with Ted.

Half an hour later, Jun felt like the room was spinning, so decided to lie down on thecouch for a while. Ted said, "You don't look so good. Imani, get him some water."

Imani went to the fridge to pour a glass of water for Jun. "Say," she called out, "did someone eat my brownie? That was medical cannabis, prescribed by my doctor for my chronic pain. I'm only supposed to eat half a piece at once..."

Jun woke up the next morning. He couldn't remember how he had ended up on the couch. All the other guests were gone. Looking on Imani's table, he was shocked to see a contract for purchase of Ted's boat, Cryptocurrent, signed by Ted and himself, in exchange for 1.0 BTC. Jun recognized his own signature, but the handwriting looked unusually sloppy.

Jun decided to contact you, his lawyer, for legal advice.

Questions for Case C:

Explain the position of both parties and discuss any legal issues that apply in this case. Consider the following questions:

1. Is the contract between Jun and Ted legally binding? Why or why not?
2. Did Ted have any responsibility to Jun because of Jun's mental state?
3. Does Jun have the legal right to cancel the contract for the boat if he contacts Ted immediately, and states that he lacked capacity at the time that it was signed?
4. Or does Ted have the right to enforce the contract because it was signed by Jun?
5. Imagine that instead of contacting Ted right away, Jun decides to take Cryptocurrent on a two-week sailing trip to California. Does he have the right to cancel the contract with Ted upon his return, on the basis that he was intoxicated at the time the agreement was made?