The discussion on the enforceability of the contract entered into during a state of intoxication is

a relevant issue that we must deal with in today’s society. People my age have our own fair share of
craziness and foolishness that we are probably too drunk to remember. However, the story narrated in
“The Gambler Who Blew $127 Million” probably show the most extreme repercussion of intoxication.
Reading the story of Mr. Watanabe begs the question on the binding effect of the things we might do
while we are drunk from the perspective of contract law.

What is the status of the contracts entered into by persons who voluntarily intoxicate themselves?
In common law jurisdictions like the United States, Hogg, et. al (2008) stated that these kinds of contracts
are generally enforceable or valid. However, some jurisprudence would provide that in certain cases,
these contracts may be voidable. In the case of Johnson v Harmon (1876), the US Supreme Court stated
that if the intoxication is so excessive as to deprive him of reason and understanding, and thus, incapable
of giving consent, then the intoxicated party may have the contract voided once he is sober. But based on
Thackrah v Haas (1886), this right is not without restrictions – the person who wants to have the contract
annulled must show that the other contracting party took advantage of such intoxication in order to
fraudulently induce the former into contracting an obligation he would otherwise not have taken if he
were sober. This means that the taking advantage of intoxication by the capacitated party was the
proximate cause of the formation of the contract.

So, do I think that Mr. Watanabe can use this defense to escape his liability with the Harrah’s? If
we look deeper into the element of consent in this case, there is no sufficient basis to establish that the
consent of Mr. Watanabe is fully impaired because of his intoxication. In the first place, he lives in the
Harrah’s itself for the purpose of gambling habitually. So, it is hard to determine whether or not
intoxication is really the proximate cause of him contracting $127 Million gambling debt. We must also
remember that he is a known “shark” in the realm of gambling who are notorious for being a large
contributor of income of the casinos. Thus, it is not unlikely that Mr. Watanabe will still lose that amount
of money regardless of whether he is drunk or not.

This is in line with the maxim in common law that a man should not disable himself (Dudley, 1913).
If people are allowed to use intoxication to avoid the performance of their obligation, then the integrity
of contract law will be destroyed. Because of this, I think that the stringent rules of using this as a defense
is reasonable because it will be unfair for a contracting party to be at the losing end just because the other
contracting party voluntarily intoxicated himself. Using a normal example, it is only fair that a drunk
person who breaks a furniture in the pub be held liable to pay for the damages he caused regardless of
how drunk he is. This way, the law will protect the business owners against losses that are not imputable
to their own fault.

Of course, my example only goes to the extent that the other party has no fault at all. Going back,
let us not forget that there are two facts that must concur in order for intoxication to invalidate the
contract. First, intoxication must be the proximate cause for the consent, which is not established in this
case. And second, that the other party took advantage of such intoxication. This implies that there is
knowledge of the intoxication by other party. As such, even though the two requisites are not satisfied,
the contract will still be valid but the intoxicated party may still have a cause of action against the other
party on the basis of negligence or fault.

In this case, the Harrah’s cannot deny their knowledge of the extreme intoxication of Mr.
Watanabe. In fact, this is partly induced by them from their acts of refusing to water down his drinks and
giving him prescription Lortab pills as pain killers. Hence, it cannot be denied that there is an intention on
their part to intoxicate Mr. Watanabe and make him incur as much losses as he possibly could. This is a
direct violation of the Nevada Regulations Statute (NRS) which gives them the direct responsibility to
control problem gambling for which the Harrah’s can be held administratively liable. Aside from
administrative liability, the Harrah’s may also be liable for damages caused to Mr. Watanabe.

Comparative fault statute based on tort laws would dictate that a person who is responsible for
the intoxication may be held liable for any accidents caused by the intoxicated party (Krentzman, 1996).
On the basis of clear breach of legal responsibilities, the Harrah’s may be considered negligent. Equity
would also provide that Mr. Watanabe shall be able to collect damages from them on the basis on tort. I
believe this conclusion is fair as it keeps the integrity of contract laws intact, and at the same time, protect
the interest of an intoxicated person who was prejudiced by the malicious and unfair acts of the other
party.

In conclusion, there are two sources of obligations present in this case. First will be the
contractual obligation of Mr. Watanabe to pay his $127 Million debt. The other obligation would be the
damages due to Mr. Watanabe based on the negligence of the Harrah’s. By resolving the case this way,
both parties will be held responsible for their own acts, and would prevent both parties from exploiting
the defense of intoxication to take advantage of each other.
References

Dudley, S. J. (1913). Intoxication as a Defense to an Express Contract. U. Pa. L. Rev., 62, 34. Retrieved
October 16, 2019 from https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=7329&
context=penn_law_review

Johnson v. Harmon. 94 U.S. 371 (1876).

Hogg, J. F., Bishop, C. G., & Barnhizer, D. D. (2008). Contracts: Cases and theory of contractual obligation.
Thomson West.

Krentzman, J. L. (1996). Dram Shop Law-Gambling While Intoxicated: The Winner Takes It All-The Third
Circuit Examines a Casino's Liability for Allowing a Patron to Gamble While Intoxicated. Vill. L. Rev.,
41, 1255. Retrieved October 16, 2019 from https://digitalcommons.law.villanova.edu/cgi/
viewcontent.cgi?article=3157&context=vlr

Thackrah v. Haas. 119 U.S. 499 (1886).