Module 03 Written Assignment - Drinking and Contract Formation Do Not Mix!

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Read the following case studies and answer the questions. Be sure to use the appropriate legal terminology that you learned this week.

Case Study 1

Steve and Bill go out drinking. After Steve has had so many drinks that Bill knows (or should know) that Steve is very intoxicated, Steve says to Bill, "I'll sell you my house for $100,000." Bill accepts. The fair market value of Steve's house is $100,000. Will Steve be able to avoid this transaction? Why or why not?

Case Study 2

Steve writes a letter to Bill one day saying, "I will sell you my house for $100,000." Completely unbeknownst to Bill, at the time Steve wrote the letter he was utterly intoxicated. The fair market value for the house is $100,000. Will Steve have to sell his house to Bill? Why or why not?

Case Study 3

Mary, a longtime law professor, has been entering into quite a few contracts in recent months. One of those contracts was for the purchase of a riding lawn mower. Unbeknownst to the sales clerk who entered Mary into the contract, Mary is suffering from Alzheimer's, but has not been deemed incompetent by the state. On the day of delivery, the sales clerk delivers the lawn mower to Mary's apartment. Mary is surprised by the delivery of the mower and has no recollection of ordering it. The clerk shows her the contract. Is this contract voidable and why?

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Explanation & Answer

Attached.

Running Head: BUSINESS LAW

1

Business Law
Name
Course
Tutor
Date

BUSINESS LAW

2

SCENARIO 1
Yes, Steve can avoid the transaction because he made the promise when he was heavily
drunk and he may be out of his real senses. Moreover, it is not ethical to consider the promises
rose in social and informal drinking places especially when an individual is drunk. There is much
evidence to prove that at the point Steve was making the promise to sell his house at $100,000 he
was drunk and therefore, he could not participate in a capacity to engage in effective negoti...


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