Blomley v Ryan (1956) 99 CLR 362

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  • Ryan owned a grazing farm
  • Ryan liked to drink, and would often go on drinking benders.
  • During one such bender, the Plaintiff offered to buy his property. After some discussion, Ryan agreed and signed a contract.
  • The contract sold the property to the Plaintiff at very undervalued terms.
  • Once Ryan sobered up, he tried to take back the contract.
  • The Plaintiff sued to enforce the contract and stated that he was not so intoxicated so as not to understand the contract’s terms.
  • Did Ryan’s intoxication mean the contract was void for incapacity?
  • The Court set aside the contract.
  • They held that the Plaintiff knew that while he was negotiating, Ryan was incapable of forming a rational judgment about the contract’s terms – although he could probably understand the general terms.
  • “The mental capacity required by the law… is relative to the particular transaction … and may be described as the capacity to understand the transaction when it is explained.” (at 438)

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