Lucy v. Zehmer

Brief Fact Summary. The Defendant, Zehmer (Defendant), writes a contract to sell land on a napkin and when the Plaintiff, Lucy (Plaintiff), tries to enforce it, Defendant claims he was only joking.

Synopsis of Rule of Law. If a party to the contract has a reasonable belief that the other party has the requisite intent to enter into the agreement when he does not, the contract is still enforceable.

Facts. Plaintiff’s sued the Defendant for specific performance of a contract in which the Defendant sold to Plaintiff a tract of land containing 471.6 acres for $50,000. Plaintiff and Defendant were sitting around before Christmas drinking together. They had a conversation about selling land for $50,000. The parties wrote up a contract signed by the Defendant saying they would give up the land for $50,000. Plaintiff offered $5 to ensure the bargain was binding and the Defendant refused. A waitress even testified that the Defendant said he was joking. Plaintiff went out and got his brother to put up half of the money. Plaintiff went back to Defendant and Defendant said I was only joking (Defendant claimed he told Plaintiff he was joking right after the contract was made). Defendant’s attorneys admitted that he wasn’t too drunk to make a contract.

Issue. Does a valid contract exist?

Held. Yes. Reversed.
The mental assent of the parties is not a requisite for the formation of a contract. If the words or other acts of one of the parties have but one reasonable meaning, his undisclosed intention is immaterial except when an unreasonable meaning which he attaches to his manifestations is known to the other party.

The evidence showed the Plaintiff was warranted in believing the contract represented a serious business transaction and a good faith sale and purchase of the farm.  A person cannot say he was joking when his words and conduct would result in a reasonable person believing it was a valid agreement.

Discussion. The court does not look to Defendants intent when making the agreement. The only focus is on the Plaintiff and if he had a reasonable belief. Here, the court is moving away from the requisite “meeting of the minds” standard, in order for there to be a valid contract.