Lucy v. Zehmer

Supreme Court of Appeals of Virginia · 1954 · Contracts

Contractsoffer and acceptanceobjective theorymutual assentjoke contractsspecific performanceobjective assentmutual assent

Facts

On December 20, 1952, after discussing the sale of the Ferguson farm for thirty to forty minutes, A. H. Zehmer wrote and both defendants signed a writing stating, “We hereby agree to sell to W. O. Lucy the Ferguson Farm complete for $50,000.00, title satisfactory to buyer.” Lucy insisted the transaction was serious, took the signed writing, arranged the next day for his brother to take a half interest, hired an attorney to examine title, and then notified Zehmer he was ready to pay cash once title was approved. Zehmer claimed the matter was a joke, that both men had been drinking, and that he never intended to sell, but the evidence showed he was not too intoxicated to understand the instrument and that nothing indicated to Lucy before execution that Zehmer was not in earnest.

Issue

Whether a signed written agreement to sell land is enforceable when the seller claims he was only joking and secretly did not intend to sell, but his words and conduct would lead a reasonable person to believe a real agreement had been made. Also, whether equity should deny specific performance under the circumstances.

Rule

A party's secret, unexpressed intention does not control contract formation. If a party's words and acts, judged by a reasonable standard, manifest an intention to agree and would warrant a reasonable person in believing a real agreement was intended, a binding contract exists even if that party was secretly jesting; mental assent in the subjective sense is not required. Specific performance will generally be granted where the contract is unobjectionable in its nature and circumstances and no established equitable ground for denial is present.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

At a neighborhood barbecue in Columbus, Ohio, Nolan Price told Dana Kim he would sell a vacant lot for $180,000. After twenty minutes of discussing price, closing, and a title review, Nolan wrote and signed, "I agree to sell my lot on Ash Street to Dana Kim for $180,000, title satisfactory to buyer," and handed the note to Dana. The next morning Nolan said he had only been kidding, though he had never said that during the discussion.

Is the note most likely enforceable?

Explanation. The majority adopted the objective theory of assent. A party's secret, unexpressed intention is immaterial if that party's communicated words and acts, judged by a reasonable standard, manifest an intent to agree. Here, the detailed discussion, signed writing, and delivery of the note would warrant Dana in believing a real agreement was intended, so Nolan cannot avoid the contract by later claiming he was joking.