Lucy made an offer to Zehmer one night while at his restaurant to purchase Zehmer’s farm for $50,000. Zehmer and Lucy both signed an agreement that promised Zehmer would sell the farm to Lucy. Zehmer claimed later that the agreement to sell the farm was made when they were both drinking at Zehmer’s restaurant and that he only meant the acceptance as a joke. Zehmer didn’t believe that Lucy’s offer was genuine since they were both drinking and went along with it signing over the farm on the back of a receipt. Lucy even offered Zehmer $5 to make the contract binding, which Zehmer refused. The following day Lucy sold a half interest to his brother to have enough funds for the sale. When Lucy presented the money to Zehmer and ask for the deed, Zehmer refused to sell him the farm. Lucy then sued Zehmer for specific performance to sell the farm for $50,000.
An issue at hand is if a contract is valid when it was made as a joke, if one party believes it to be serious. In other words does there need to be assent of both parties in order for the contract to be binding. Would the contract also be valid if one or both parties were intoxicated? Also, was Lucy reasonable in taking Zehmer seriously, and is specific performance an adequate remedy.
The rules of law that the court used 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.” Restatement of the Law of Contracts, Vol. I, 71, p. 74. and “Specific performance, it is true, is not a matter of absolute or arbitrary right, but is addressed to the reasonable and sound discretion of the court.” First Nat. Bank v. Roanoke Oil Co., supra, 169, VA. At p. 116, 192 S.E. at p. 771.