Oregon Construction Contractors (CCB) Practice Test

What situation indicates that parties might lack legal capacity?

1. In a contract for employment

2. When someone is heavily under the influence of drugs or alcohol

3. During a real estate transaction

4. While signing a lease agreement

The correct answer is: When someone is heavily under the influence of drugs or alcohol

In the context of legal agreements, a situation where someone is heavily under the influence of drugs or alcohol significantly indicates that the parties might lack legal capacity. Legal capacity refers to an individual's ability to understand the nature and consequences of entering into a contract. If a person is impaired by substances, their judgment and comprehension may be compromised, which affects their ability to contract competently. Contracts require that all parties have a clear understanding of the terms and implications of their agreement. When under the influence, a person may not fully grasp what they are signing or may not appreciate the obligations they are undertaking. Therefore, this impairment is crucial in determining whether a contract is enforceable. Contracts entered into by individuals who lack legal capacity, whether due to drug or alcohol influence or other reasons (such as minority age or mental incapacity), can be voided or deemed unenforceable. The other scenarios listed—employment contracts, real estate transactions, and lease agreements—can involve legal capacity issues, but the specific mention of being heavily under the influence directly highlights a critical situation where an individual's legal capacity is commonly challenged.