Ellen is the president of a bank. She attends an event attended by several other local businesspeople. Ellen, who does not drink alcohol, is offered a beverage she believes is coffee. Ellen accepts the beverage, thinking it is simply coffee, and not realizing that it is actually an alcoholic coffee drink. During the course of the evening she consumes several of the beverages and becomes intoxicated. While intoxicated, she speaks with Lindsey, who has been hoping to borrow money to finance the construction of an office building. Ellen agrees to loan $10,000,000 to Lindsey at an interest rate that is much lower that the market rate. The next day, Ellen seeks to avoid the transaction with Lindsey. 

Ellen is bound to make the loan to Lindsey since there is no contractual defense for intoxication.

Ellen has a defense to the contract, but she must prove that her intoxication prevents her from remembering or accurately testifying to the events surrounding the formation of the loan agreement.

Ellen has a defense to the contract, but she must prove that Lindsey knew Ellen was intoxicated and knew that she was agreeing to a loan below the market rate.

Ellen has a defense to the contract, but she must prove that Lindsey had reason to know that Ellen was intoxicated and that Ellen was unable to either understand or act in relation to the loan agreement.

Answer rating: 100% (QA)

In legal terms intoxication can potentially be used as a defense to a contract in certain situations for instance if it can be demonstrated that the i... View the full answer