Citation. 196 Va. 493, 84 S.E.2d 516 (1954)
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Plaintiffs, W.O. and J.C. Lucy, brought suit against Defendants, A.H. and Ida Zehmer, for specific performance of a memorandum for the sale of the Defendants’ farm. Defendants argued that their offer to sell to the Plaintiffs was a joke, and that they never intended to sell their land. The Supreme Court of Virginia reversed the trial court’s ruling in favor of the Defendants, and ordered specific performance of the contract.
Synopsis of Rule of Law.
When a person’s words and actions, judged under a reasonable standard, demonstrate an intent to agree to a contract, his/her unexpressed subjective state of mind is irrelevant.
Facts.
Plaintiff W.O. Lucy offered to purchase Defendants’ farm for $50,000 cash. Defendant A.H. Zehmer, believing Plaintiff’s offer to be a joke, executed a memorandum for his and his wife’s signature to sell their farm to Plaintiff W.O. Lucy for $50,000. The Defendant had had several drinks when he executed the memorandum. Plaintiff picked up the memorandum and offered Defendant $5 as a deposit. Defendant refused the money and explained that his offer was not serious, but he did not ask Plaintiff to return the writing. Plaintiff insisted that he had purchased the land. The next day Plaintiff transferred a one-half interest in the farm to his brother, W.O. Lucy, and arranged to have the title examined. Defendants refused to deliver title to the farm, and Plaintiffs sued for specific performance. The trial court held that Plaintiffs had not established a right to specific performance of the memorandum. The Supreme Court of Virginia reversed and ordered specific performance.
Issue.
Whether the objective appearance of a good faith offer and acceptance is sufficient to form a binding contract where one party has an unexpressed intention not to be bound?
Held.
Yes.
Mutual assent is required for the formation of a contract. Courts will find intent based on a reasonable interpretation of a person’s words and actions.
An unreasonable meaning or a secret intent not to agree is immaterial if that meaning or intent is not known to the other party at the time the contract is formed.
Discussion.
The court’s decision demonstrates the objective theory of assent, which looks to the reasonable meaning of a party’s expressed words and actions in deciding whether there is an agreement.
