Capacity to Contract with Cannabis Impairment

Viewpoints: Impairment considerations in the cannabis industry

A person must have the capacity to contract in order for the contract to be legally binding upon them. Essentially, it doesn’t mean anything more than “having their wits about them”, but, naturally there are many reasons why someone’s judgment might be impaired.

They might be subject to a mental disability of some nature, either permanent or temporary. They may have suffered a recent injury and as a consequence, their judgment is impaired. They might be intoxicated due to alcohol, drugs or medication, whether such are medically prescribed or not, or a combination of several of these factors. They might be subject to some form of anesthesia following an accident; they may be subject to excruciating pain resulting from an accident. They might be subject to coercion or undue influence from a third party.

The use of cannabis, obviously is something which could range from:

  1. no impairment whatsoever, to
  2. substantial impairment which would affect the capacity to enter into a contract.

Generally, an individual must understand the nature and consequences of their decision in order to have the capacity to contract. This is an old problem!

The solution for several thousand years was to have a Witness. That person could come to Court and testify that none of those factors were present, hence, we have a valid contract.

Recently, we have contracts without witnesses in real estate transactions. That’s the new way of doing business. It is a modern but more convenient approach.

This leaves open the issue of capacity at the time of execution of the contract. Who knows!

At least, the Courts will have to figure it out a few years after the fact. If there is substantial impairment due to the consumption of cannabis, then the Courts might determine that the contract was void ab initio (right from the outset).

Brian Madigan LL.B., Broker

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