Lucy v. Zehmer (1954)

Case Brief: Lucy v. Zehmer (1954)

Issue: The main legal issue is whether the defendants, the Zehmers, were contractually obligated to sell their farm to the plaintiff, Lucy, based on the agreement written on the back of a restaurant receipt, even though the defendants claimed they were intoxicated and considered the agreement to be a joke.

Rule: For a contract to be enforceable, there must be a meeting of the minds, offer and acceptance, and consideration. The outward expression of a person as manifested in his words or acts is given greater weight than his secret and unexpressed intention.

Application: Although the Zehmers contended the agreement was made in jest, the court looked to their outward expressions and actions. Despite the claim of intoxication, the court found that they were not so intoxicated as to be incapable of understanding the nature and consequences of the transaction. Zehmer had discussed the sale with his wife, written down the agreement, and had negotiated the terms, all of which indicated that a reasonable person would believe that the contract was serious.

Conclusion: The court concluded that a binding contract was formed between Lucy and Zehmer for the sale of the farm.

Detailed IRAC Outline:

I. Issue

  • Whether a contract existed between Lucy and Zehmer for the sale of Zehmer’s farm, known as “Ferguson Farm,” based on the writings and actions that occurred between them.
  • Whether Zehmer’s claim of the agreement being a joke because of intoxication is a valid defense that would prevent the formation of a contract.

II. Rule

  • The objective theory of contracts states that a contract is formed if the parties’ words and actions demonstrate an intention to form a contract, regardless of their subjective state of mind.
  • The elements required for the formation of a contract are an offer, acceptance, consideration, and mutual assent (meeting of the minds).
  • Intoxication can render a contract voidable if it can be shown that the intoxicated party was incapable of understanding the nature and consequences of the transaction and the other party was aware of this incapacity.

III. Application

  • The court looks into whether the outward actions of Zehmer indicated a serious offer which was accepted by Lucy.
  • Evidence showed that Lucy and Zehmer discussed the sale of the farm over the course of 40 minutes, during which Zehmer wrote down an agreement to sell the farm for $50,000 and both he and his wife signed it.
  • The defense of intoxication was not supported by the evidence since there was no indication that intoxication impaired Zehmer’s understanding of the transaction. The actions of discussing the offer with his wife and taking the time to write it down indicate a capacity to understand the transaction.
  • Despite Zehmer’s claim that he was joking, the court determined that his actions, which were consistent with creating a contract, held more weight than his unexpressed intention or belief that he was not entering into a serious agreement.

IV. Conclusion

  • The court concluded that the agreement written on the back of the restaurant receipt constituted a valid and enforceable contract between Lucy and Zehmer.
  • Zehmer’s defense that he was joking or that he was too intoxicated to enter into a contract was not upheld, as his outward expressions indicated a serious contractual agreement.
  • Lucy was entitled to specific performance of the contract, requiring Zehmer to sell the farm to Lucy for the agreed price of $50,000.

The decision in Lucy v. Zehmer provides an important legal precedent in contract law, emphasizing the significance of outward expressions and conduct over internal, unexpressed intentions when determining the formation of a contract. This case is often cited for the proposition that the subjective intent of the parties is not relevant if their actions manifest a different intent that would be interpreted by a reasonable person as an intention to enter into a contract.

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