Question

Discussion Topic 3 (DQ3): Lucy v. Zehmer, Contract Formation, and Intent

Lucy v. Zehmer is famous case in contract law and establishes a legal principle that is still followed today.  

What are the primary elements of a Contract?

What facts about the case do you find important/interesting?

What is the important principle of law determined in the case?

What element of contract law does the case implicate?  

Answer 1

Solution :

The primary elements of the contract between Lucy v. Zehmer are:

NOTE: Defendant is Mr. Zehmer & plantiff is Mr. Lucy

1. Mutual Assent i.e. in the above case , The defendant was out at a restaurant and signed away his farm to the plantiff on the back of a guest check.
2. When the plantiff sued to enforce the agreement , the defendant claimed to have made the offer jokingly .
3. The court adopted an objective test and held that the undisclosed intenet made by the defendant that he did not believe that he was making a real offer & was merely joking was immaterial because the plantiff was unaware of the defendant’s uncommunicated intent.
4. The circumstances surrounding the transaction were such that Plantiff was justified in believing that it was a serious business transaction, rather than a mere jest.   

The facts about the case which is important are:

1. The defendant & the plantiif has been known to each other since many years. Some years prior to the case, Zehmer had orally agreed to sell the farm to Lucy but later reconsidered and declined to complete the sale.
2. One fine night, at a restaurant, two friends had few drinks together , where defendant wrote on the back of the restaurant's receipt stating, "We hereby agree to sell to W. O. Lucy the Ferguson Farm complete for $50,000.00, title satisfactory to buyer". The note was signed by Zehmer and his wife.
3. Next day Lucy spoke to his brother, J.C. Lucy, about the purchase, and he hired an attorney to examine the title. After the attorney assured Lucy that the title was clear, he wrote a letter to Zehmer asking when he intended to close the deal. Zehmer insisted that he had never intended to sell the farm and that the note signed by him and his wife was written in jest, consistent with the jovial atmosphere and drunken camaraderie the parties were sharing that evening.

The important principle of law determined in the case are:

The mental assent of the parties is not 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 case implicates that:

Here, the court is moving away from the requisite “meeting of the minds” standard, in order for there to be a valid contract.

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.