Case: 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: The outward expression is what counts in contract formation.

Notes

The focus is upon what was said and done and not what was thought.