STATEMENT OF FACTS Mr. Bibe is a thirty-two-year-old marketing executive who works or a computer chip company. He has a bachelor’s degree in business administration and has majored in accounting. In addition, he has a master’s degree in marketing. According to the current records, Mr. Bibe has shown to be a very hardworking man as he has moved up the ladder with regard to marketing over the last several years. Mr. Bibe is now seeking professional and legal advice as to whether he is bound by a contract that he signed when he was drunk.
Last Friday Mr. Bibe and three co-workers left the office at lunch time around 12. 30 p. m. to celebrate their victory of attaining the targeted goals for the previous year with regard to sales and marketing. This achievement entitled each of them to a bonus of $ 150, 000. This was the third consecutive year that Mr. Bibe and his group had reached their goals. Mr. Bibe and two of the co-workers were drinking wine during lunch. A third co-worker, Owen Lotts, drank only water. Each of them ordered a large salad to eat. While Mr.
Bibe and the two co-workers enjoyed their second bottle of expensive wine, Lotts began telling Mr. Bibe about a small coffee shop that he wanted to sell. Lotts was aware that Mr. Bibe had been looking for a small business to purchase. Lotts told Mr. Bibe that with the bonus money from the past two years, Mr. Bibe could purchase Lotts’ coffee shop that the coffee shop was a profitable business, and it was worth well over the $300,000 asking price. Mr. Bibe laughed and said, “It’s tempting, but I’m not interested right now. ” Lotts made an order for a third bottle for group.
Meanwhile, he went to his car. He returned with some books that he said contained his business records. Lotts again told Mr. Bibe what a great deal the coffee shop was, that Lotts had consistently made over $30,000 per year profit on the shop, and that Mr. Bibe should buy it. Mr. Bibe finally told Lotts to put the offer in writing. Lotts walked up to the bar and returned with another bottle of wine and a blank piece of paper. Lotts poured the wine for the group and poured another drink of water for himself. He then wrote the following offer on the paper.
“I, Owen Lotts, consent to sell, whereas I. M. Bibe agrees to purchase “The Coffee Shop” at 12 N. Main Street for the sum of $300,000. ” Lotts put his signature on the paper and handed it to Mr. Bibe, who took the paper while drinking the wine and said, “Oh, why not? I’ve always wanted a profitable little side business. ” Mr. Bibe then signed the paper. Lotts paid the lunch and wine bill and the group left. By then it was 3:00 p. m. , so the group decided not to go back to the office. Mr. Bibe drove to his home, about 20 miles away, and took a nap. He awoke about 8:00 p. m. with a headache, but immediately remembered the events of the afternoon.
Now, Mr. Bibe is not sure as to whether he still wants to buy the coffee shop. He has therefore asked us to give him the appropriate advice on whether he is bound by the contract that he signed. QUESTION PRESENTED Can Mr. Bibe withdraw from the contract on the basis that he was drunk? SHORT ANSWER Yes. A contract entails deliberation so as to come up to a conclusive judgment and requires both parties to be of sound mind without influence of intoxication. DISCUSSION In Phelan v. Gardner, 2,456 (California 1872), a judgment is considered to be conclusive if there are questions involved in the process of making the judgment. In this circumstance, Mr. Bibe was not engaged in a session that would allow him to ask questions. Mr. Bibe signed the contract but the apparent question is whether there was enough deliberation between the two parties for the contract to be considered conclusive. Therefore, the judgment made by Mr. Bibe here cannot be considered to be conclusive. Mr. Bibe was not in his right sober mind for him to make such a conclusive decision.