Signing a Contract While Intoxicated: The Legal Perspective
Have you ever wondered what would happen if you accidentally signed a contract under the influence of alcohol? Would the contract still be valid? The answer is a bit tricky. History is replete with hilarious instances of people doing unbelievable things while being under the influence of substances. Imagine yourself having a wild night out with your colleagues at an office party. There’s always one person in the group who has never had alcohol before but ultimately gives in to peer pressure and tries a drink. As the night progresses, one glass becomes two, and two becomes three. Before anyone realizes, things are spiraling out of control and nobody remembers what that person was up to while the rest were partying. What if a stranger approached him and wooed him into signing something that might have disastrous consequences? For all you know, he might have accidentally outsourced an entire department’s work to an unknown agency or agreed to sell out his shares to this stranger! A tragic mishap like this could destroy the company’s brand image and cost them a fortune to rectify the wrongs. As bizarre as these instances may sound, they do happen. Here’s an example:
The Lucy-Zehmer case
Back in 1954, the Supreme Court of Virginia witnessed a historic case (Lucy - plaintiff v. Zehmer – defendant, 196 Va. 493; 84 S.E.2d 516 (1954)) that found its way into law books – a classic example of how intoxication affects a contract.
There was a land spanning over 471.6 acres called the Ferguson Farm, belonging to a couple, the Zehmers. A man named Mr. Lucy, an acquaintance of Mr. Zehmer, expressed his interest in purchasing the farm for $20,000. Mr. Zehmer backed out of the deal after thinking it through. Later, during one of his outings with Mr. Zehmer, Mr. Lucy approached him for the second time to purchase the property for $50,000. After few rounds of drinks, both the parties signed a contract making Mr. Lucy the farm owner. However, when it came to enforcing the contract, Mr. Zehmer claimed that he was joking when he agreed to sell the farm. It was then Mr. Lucy decided to sue the other party and enforce the contract. The verdict was in favor of the plaintiff, seeing how the court and the attorneys concluded that the defendant was not intoxicated enough to invalidate the contract.
In this case, it is observed that the mental assessment or the parties’ intentions beyond the contract have not been deemed relevant during the formation of the contract.
What does the law state in such cases?
In legal terms, every contract consists of an offer, the terms of the agreement, meeting of minds, and consideration so that the court can enforce them if either of the parties sues the other. In such cases, the point to be noted is that the intoxicated party might not fully understand the terms of the agreement and hence render the contract void. As a result, the party may defend by stating undue influence, coercion, or misrepresentation. This does not necessarily mean that any party can back out of the contract after signing it while claiming to be intoxicated.
Although after claiming to be impaired, it’s not like the other party is rendered defenseless. Likely, the other party might also have suffered a loss as a consequence of signing the contract. In such cases, the other party can exercise “quasi-contractual claims” stating that the contract was signed in good faith.
Also read: FAQs – Digital Signatures in India
Digital Signatures – the solution to this problem
The factors that affect the court’s decision are based on the circumstances under which the contract is signed. If such a situation arises, the first step would be to lawyer up. However, there’s another solution that is far more efficient in preventing such situations in the first place – digital signatures!
Digital signature software makes it virtually impossible to log in and sign the document while being intoxicated. These ingenious applications come with secure logins that require serious motor skills, presence of mind, and precision – all of which are next to impossible to come by when one is intoxicated. To sum it up, signing contracts while being impaired can turn out to be a taxing procedure with dire consequences. The only way to avoid it is to eliminate paper-based workflow and implement a digital signature solution.