Case

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Lucy v. Zehmer (1954)

Parties: Plaintiff - Lucy Defendant - Zehmer Procedural History: Found for defendants; plaintiffs appeal.

Facts: W.O. Lucy and J.C. Lucy are suing the Zehmers for specific performance of a contract in which the Zehmers sold to W.O. Lucy a tract of land containing 471.6 acres for $50,000. Lucy and Zehmer are sitting around before Christmas drinking together; they have a conversation about selling land for $50,000. They write up a contract signed by the Zehmers saying they would give up the land for $50,000. Lucy offers $5 to ensure that the contract and Zehmer refuses. Waitress even testifies that Zehmer said he was joking. Lucy goes out and gets his brother to put up half of the money. Lucy goes back to Zehmer and Zehmer says I was only joking (he claims that he told Lucy he was joking right after the contract was made). Zehmer’s attorneys admit that he wasn’t too drunk to make a contract. Issue: Is a contract valid if a party expresses an intent to contract that a reasonable person would believe, even if he was joking, and did not really intend to contract? Holding: There is a contract; the evidence shows that Lucy was warranted in believing that execution of the contract was a serious business transaction. Reversed and remanded. Reasoning: It does not matter that Zehmer was joking or not, but only that a reasonable person would believe a contract was made. Facts indicate a serious business transaction. They discussed the contract for 40 minutes, wrote it down, and Zehmer made sure that both Mr. and Mrs. Zehmer signed it. Also, Lucy got his brother to put up half the amount, which shows Lucy believed a contract was created. Also, although they were drinking, it was shown that Zehmer was not that drunk that he didn’t know what he was signing. Therefore, it was Zehmer's objective intent, his expressions, that a reasonable person would believe to be an agreement to contract, that matters, and not his subjective intent, that he was joking. Lucy did not know at the time of the writing that it was a joke. In the context that it was discussed for 40 min, then told it was a joke, doesn’t matter that he said he was joking, it wont make a difference. RULE: Notes The focus is upon what was said and done and not what was thought. The outward expression is what counts in contract formation.