Facts of the Case: After several drinks, Zehmer (D) wrote and signed a contract in which he agreed to sell his farm to Lucy (P) for $50,000. Zehmer insisted that he had been intoxicated and thought the matter was a joke, not realizing that Lucy had been serious. Zehmer was trying to get Lucy to admit to not having $50,000. Lucy claimed that he was not intoxicated and believed that Zehmer was also sober. Lucy brought suit for specific performance when Zehmer refused to complete the transaction. The trial court ruled for Zehmer holding that Lucy had not established a right to specific performance. On appeal the Supreme Court of Virginia found that Zehmer was sober enough to know what he was doing and that his words and actions warranted a reasonable belief that a contract was intended.
Question: In determining whether a party has made a valid offer, how does the court determine whether the party had the intent to contract?
Holding: The Supreme Court of Virginia reversed the decision of the Circuit Court of Dinwiddie County, Virginia and stated Zehmer had signed a binding contract.
Reasoning: The parties of a contract do not have to mentally agree to the deal. If their words or actions have the reasonable meaning of a serious business transaction, undisclosed intentions are immaterial and do not render the contract unenforceable. A contract must have a good faith offer and a good faith acceptance with terms of consideration known by each party. The court ruled that just because Zehmer had not mentally agreed to the deal, his conduct indicated to Lucy in a reasonable manner that the transaction was not a joke, and Lucy had no knowledge of Zehmer’s mental assessment.