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Contracts · Objective theory of assent · Case brief

Lucy v. Zehmer

196 Va. 493 · Supreme Court of Appeals of Virginia · 1954
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Facts

W. O. Lucy sought specific performance of a written agreement signed by A. H. Zehmer and his wife stating, "We hereby agree to sell to W. O. Lucy the Ferguson Farm complete for $50,000.00, title satisfactory to buyer." The writing was prepared and signed after a lengthy discussion in Zehmer’s restaurant about the sale price and terms of the farm. Zehmer later claimed the transaction was made in jest and while both parties had been drinking, and that he never intended to sell. Lucy, however, promptly arranged financing, had title examined, and notified Zehmer he was ready to close, after which Zehmer refused to perform.

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Issue

Whether a signed written agreement to sell land is enforceable when the seller claims he was joking and secretly did not intend to enter a real contract.

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Rule

Contract formation is judged by the parties’ outward expressions, not by undisclosed subjective intent. If a party’s words and acts would lead a reasonable person to believe a real agreement was intended, secret reservations or claims of jest do not prevent contract formation.

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Holding

Yes. The writing was a binding contract, and Zehmer’s unexpressed claim that he was joking did not negate assent because his objective conduct manifested a serious agreement.

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Reasoning

The court found Zehmer was not so intoxicated as to be incapable of contracting and that the circumstances showed a serious transaction: the parties discussed the sale for 30 to 40 minutes, revised the writing, included terms about title, and obtained Mrs. Zehmer’s signature. Lucy’s conduct immediately afterward—arranging funds, hiring counsel to examine title, and demanding performance—showed he reasonably understood the agreement as genuine. Because Zehmer never communicated any joke or reservation before execution and delivery of the writing, the law treated his manifested assent as binding.

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Significance

Lucy v. Zehmer is a leading case on the objective theory of contracts: liability turns on how a party’s manifestations would be understood by a reasonable person, not on hidden intent. It is especially important in teaching assent, joking offers, and the limited relevance of subjective intent. Closely related authorities include First National Exchange Bank v. Roanoke Oil Co., 169 Va. 99, 192 S.E. 764 (1937), which the court cited for the objective-intent principle, and Embry v. Hargadine, McKittrick Dry Goods Co., 127 Mo. App. 383, 105 S.W. 777 (1907), another classic objective-assent case.

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