Did a meeting of the minds actually occur here? Should words written on the back of a restaurant check be enough evidence to indicate objective intent? Why or why not?
W.O. Lucy (Lucy) was a farmer who knew A.H. Zehmer (Zehmer) for a period of 15 to 20 years. At one point during their relationship, Lucy offered to buy Zehmer’s farm for $20,000, but Zehmer rejected the offer outright. Seven years later, Lucy met Zehmer at a restaurant and had a conversation over a period of hours while the two drank whiskey together. During this conversation, Lucy again offered to purchase Zehmer’s farm. According to the testimony at trial, the following exchange of words took place:
Lucy: I bet you wouldn’t take $50,000 for that farm.
Zehmer: You haven’t got $50,000 cash. Lucy: I can get it.
Zehmer: But you haven’t got $50,000 cash to pay me tonight.
Eventually, Lucy persuaded Zehmer to put in writing that he would sell Lucy the farm for $50,000. Zehmer handwrote the following on the back of the pad: “I agree to sell the Ferguson Place [Zehmer’s farm property] to W. O. Lucy for $50,000 cash.” The parties then modified this writing several times and discussed terms over a period of 30 to 40 minutes. At the end of the evening, each party had signed the modified document that agreed to a sale of Zehm-er’s farm to Lucy for $50,000. The next day, Lucy believed that the contract was valid and proceeded to act accordingly by seeking financing for the purchase and checking title. However, Zehmer notified Lucy that he would not transfer title since no contract was formed. Rather, Zehmer had understood the whole transaction as a joke. At trial Zehmer testified that he “was high as a Georgia pine” while modifying and discussing the contract and that he was just “needling” Lucy because he believed Lucy could never come up with the money. Zehmer claimed that before he left the restaurant that night, he told Lucy that it was all a big joke, that the negotiations were just the “liquor talking.” Zehmer claimed that he had not actually intended to sell the property, thus the contract lacked serious intent and was void.
The court ruled that Zehmer was bound by the contract even if he had no actual(subjective) intent to sell the farm and may have been joking. The court used the objective standard in determining that a reasonable person would have construed Zehmer’s actions and words as a serious intent to contract. The court held that evidence from the trial indicated that Zehmer took the transaction seriously, and that Lucy was not unreasonable in believing that a contract was formed under the circumstances. The court made clear that actual mental intent is not required for formation of a contract.
“The appearance of a contract; the fact that it was under discussion for forty minutes or more before it was signed; Lucy’s objection to the first draft; . . . the discussion of what was to be included in the sale . . . are facts which furnish persuasive evidence that the execution of the con-tract was a serious business transaction rather than a casual, jesting matter as the defendant now contends. “An agreement or mutual assent is of course essential to a valid contract but the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts. If his words and acts, judged by a reasonable standard, manifest an intention to agree, it is immaterial what may be the real but unexpressed state of his mind.”