Facts

• 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.

issue

• Did Ryan’s intoxication mean the contract was void for incapacity?

held

• 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.

Quote

• “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)

-- Download Blomley v Ryan (1956) 99 CLR 362 as PDF --

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