Under the Restatement (Second)of Contracts,intoxication will make a contract voidable if the other party has reason to know that the intoxicated person is so intoxicated that he/she cannot understand or act reasonable in relation to the transaction.

The mere fact that a party to a contract had been drinking when the contract was formed would not normally affect his/her capacity to contract.Intoxication is grounds for lack of capacity only when it is so extreme that the person is unable to understand the nature of the business at hand.Section 16 of the Restatement (Second)of Contracts provides that intoxication is grounds for lack of capacity only if the other party has reason to know that the affected person is so intoxicated that he/she cannot understand or act reasonably in relation to the transaction.