The simple answer is that not everyone can enter into a contract. A basic principal is that for a person to enter into contracts, they must have:
- Mental capacity
The reason contracts have these requirements is that we don’t want certain parties taking advantage of other, less sophisticated persons.
In general the age at which a party can enter into a binding contract is the “age of majority.” In many states this means age 18.
The tests for determining mental capacity when one has passed the age of majority are very complex and vary from state to state. Some states use the “appreciate effects” test. This test asks if a person has the capacity to understand what they are doing and appreciate its effects. Another test, the “control” test, asks whether someone can control themselves regardless of their understanding.
These laws will vary from state to state. As a general matter, intoxication may make a contract voidable only if a party has a reason to believe the other is too intoxicated to appreciate the obligations of the contract, or is unable to reasonably perform the contract. Most courts do not only look at whether the intoxicated person understood what they are agreeing to, but also if the other person had reason to know of the intoxication. It does not matter that the person did not look drunk at the time of contract, only whether or not the other party had reason to believe the intoxicated party lacked the mental capacity to understand the agreement.
The question of capacity to contract is a fundamental question in any contract. If you believe that you should not be bound to a contract you have signed for mental reasons, you should contact a contract lawyer to help you evaluate your obligations and responsibilities.