Contractual Intent: Lucy v. Zehmer

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In order to have a valid and enforceable contract, you have to have an Offer, Acceptance of that Offer, and Consideration.

The requirements for an effectiveOffer are:

• Intent: The offeror (person making the offer) must objectively intend to be bound by the offer. Subjective (inner thoughts) intent is irrelevant.
• Definite and Certain Terms: The terms of the offer must be definite or reasonably certain.
• Communication to the Offeree: The offer must be communicated to the offeree or the offeree's agent.

Lucy v. Zehmer, 196 Va. 493, 84 S.E.2d 516 (1954),is an important breach of contract case involving the first element of an effective offer (i.e. a party's intent to be bound by an Offer).

Plaintiff (Lucy) wanted to purchase Ferguson Farm from Defendant (Zehmer) for at least 8 years. One night, Lucy stopped by Zehmer's establishment and said that he bet Zehmer would not accept $50,000 for the land. Zehmer replied that he would, but he bet that Lucy would not pay $50,000 for the land. The parties drank whiskey and talked about the sale of the land for about 40 minutes. Lucy got Zehmer to draw up a contract for the sale of the land for $50,000. Zehmer obliged when Lucy asked Zehmer to change the language of the contract from "I hereby agree" to "We hereby agree." On the back of a restaurant check, Zehmer wrote"We hereby agree to sell to W. O. Lucy the Ferguson Farm complete for $50,000.00, title satisfactory to buyer," and signed by the defendants, A. H. Zehmer and Ida S. Zehmer.Zehmer convinced his wife to sign the agreement by whispering to herthat he "was just needling him [Lucy], and didn't mean a thing in the world, that I was not selling the farm." When Lucy later attempted to enforce the agreement, Zehmer refused to complete the sale, arguing that he had been drunk and the agreement to sell the property had been made in jest as a bluff or dare.

Lucy sued Zehmer and asked the court for the remedy of specific performance (i.e. contract be fully performed) alleging there was a valid contract for the sale of 471.6 acre farm for $50,000. Zehmer argued that he was drunk and he did not intend to be bound by the terms of Lucy's offer to purchase the land because he was only joking when he agreed. The court ruled in favor of the Plaintiff.

In determining a party's intent to enter into a contract, a court will only look to the outward expression of a person as manifesting their intention rather than to their secret and unexpressed intention (i.e. their objective intent).The law imputes to a person an intention corresponding to the reasonable meaning of his words and acts.The mental assent of the parties is not required for the formation of a contract. That is, a party's secret and unexpressed intention is immaterial.

Court used the reasonable person standard in reaching it's conclusion that Zehmer's OUTWARD manifestations (words and acts) would lead a reasonable person to believe that Zehmer was making a serious OFFER. Itwas NOT obvious to Lucy that Zehmer was joking. Only Zehmer and his wife were aware that it was an Offer made in jest. The parties were drinking, but the court determined that it was not to an extent that they were unable to understand fully the nature and consequences of the agreement at the time the agreement was made.

The case opinion can be found athttps://scholar.google.com/scholar_case?case=17973184776787787919&q=lucy+v.+zehmer&hl=en&as_sdt=40006&as_vis=1

Here is a YouTube video about the case: https://www.youtube.com/watch?v=e3aGAylR8FA

1. Do you agree with the Court's decision?

2. (a) Is the objective standard in contracts fair and just? (b) Why or why not?