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*A BRIEF IS A SHORT SUMMARY OF THE CASE WHICH INCLUDES: A description of the parties involved in the case (who they are and the
*A BRIEF IS A SHORT SUMMARY OF THE CASE WHICH INCLUDES: A description of the parties involved in the
case (who they are and the reason they are in court), short summary of the facts, the trial court's decision and the decision (who won) of the Appeal's court and their legal reason why.
case (who they are and the reason they are in court), short summary of the facts, the trial court's decision and the decision (who won) of the Appeal's court and their legal reason why.
FACTS Randy Hyland, unable to pay two promissory notes due September 19, 1981, negotiated with The First State Bank of Sinai for an extension. The Bank agreed on the condition that Randy's father, Mervin, act as cosigner. Mervin, a good customer of the Bank, had executed and paid on time over sixty promissory notes within a seven-year period. Accordingly, the Bank drafted a new promissory note with an April 20, 1982, due date, which Randy took home for Mervin to sign. On April 20, 1982, the new note was unpaid. Randy, on May 5, 1982, brought the Bank a check signed by Mervin to cover the interest owed on the unpaid note and asked for another extension. The Bank agreed to a second extension, again on the condition that Mervin act as cosigner. Mervin, how- ever, refused to sign the last note, and Randy subsequently declared bankruptcy. The Bank sued Mervin on December 19, 1982. Mervin responded that he was not liable since he had been incapacitated by liquor at the time he signed the note. He had been drinking heavily throughout this period and in fact had been involuntarily commit- ted to an alcoholism treatment hospital twice during the time of these events. In between commitments, however, Mervin had exe- cuted and paid his own promissory note with the Bank and had transacted business in connection with his farm. The trial court held that Mervin's contract as cosigner was void due to alcohol-re- lated incapacity, and the Bank appealed. DECISION Judgment for the Bank. OPINION Mervin's obligation on the note was voidable, not void, due to his alcohol-related incapacity. Voidable contracts may be disaffirmed by the temporarily disabled party. Disaffirmance, however, must be prompt upon the recovery of the intoxicated person, or upon notice of the agreement if the once-disabled person has forgotten it. A voidable contract may also be rat- ified by the party who contracted while disabled, resulting in a fully valid legal obligation. Ratification may be either express or implied by conduct. Furthermore, failure to disaffirm over a period of time may itself ripen into ratification, especially when voiding the contract will significantly prejudice the other party. Mervin had notice, both from Randy and the Bank, that the note he cosigned was overdue. Nevertheless, Mervin wrote a check paying the interest due. Such action amounts to ratification by conduct. Mervin also ratified the contract by waiting several months before attempting to disaffirm. The Bank has been sig- nificantly prejudiced by Mervin's delay since Randy has now been discharged through bankruptcy. Through his failure to disaffirm and subsequent ratification, the once-voidable contract is now fully binding on Mervin. INTERPRETATION An intoxicated party ratifies a contract by not disaffirming it when she is not intoxicated and learns of its existence and by making interest payments on it when she is not intoxicated. CRITICAL THINKING QUESTION When should a person be allowed to invalidate an agreement because of intoxication? Explain.
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