Introduction to (Drunk) Contract Law: Lucy v. Zehmer

Laying Down the Law with Billy DeClercq, Esq.

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We're Back! This episode is the beginning of a deep dive into the law of contracts!

• What is the Law of Contract?
• Why do we have it?
  • Retrospective view - it lets us understand what did the parties mean when they formed the contract
    • Reason: we want to find ways to deliver the bargain or the thing they wanted at the time they entered to contract and it puts order in their relations for a more stable society
  • Prospectively - to provide a set of rules in case an unanticipated thing happens
    • This is provided by the law of contract; it provides for the set of rules that fills in the gaps that were not covered by the agreement entered int
• Law creates default rules. As long as you know the basic rules, one can customize an agreement. It is guided or is based on the default rules.
• Law comes from different sources - aside from those made by the legislature, it can come from common Law
  • Common Law refers to decisions of judges that are later on implemented as law
  • Restatement of the Law is a collection of the cases that are implemented law. It is a summary of rules that point you to the cases that establish principles of law.
• Restatement of Contract Law - the specific restatement that applies to the laws and principles of Contracts. After some time, the restatement has formed the common understanding of what a contract is.
• What is a Contract? A contract is a bargain for exchange for value. It requires an offer and acceptance. There are two parties; one makes the offer, the other accepts. When there is a mirror image, or when the offer and the acceptance match each other, you have a contract. Once there is agreement, the contract is enforceable. People cannot bail out of their agreements, once it is entered into.
• Offer and acceptance is important and it goes to the idea of intent. Did these parties have the intent to agree? Were their intentions the same?
• This is discussed in the case of the week.

Case of the Week: Lucy v. Zehmer (VA, 1954)

• Facts: Defendant Zehmer and his wife owned land in Dinwiddie County, Virginia, known as the Ferguson Farm. Plaintiff W. O. Lucy had known Zehmer for many years and had previously expressed interest in purchasing the farm. Zehmer had orally agreed to sell the farm to Lucy but later reconsidered and declined to complete the sale. Later on, Lucy entered the restaurant owned by Zehmer with a bottle of whiskey in his hand. The parties consumed the spirits and Zehmer got very drunk. The latter even 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". Zehmer and his wife signed the contract. Thereafter, he later alleged that his wife had initially balked at his request that she sign the instrument, but she relented when Zehmer assured her that his intent to sell the farm was merely a joke.

• The 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 he perceived the whole ordeal as a joke. The court held that the complainants had failed to establish their right to specific performance, and it dismissed their bill.

• Reasoning: Whether the contract was effective? Was there a contract were a situation that a party is drunk and stated that he knew that it was all a joke.

• Holding: Appellant court held that there is a contract and the sale should be executed. Archibald C. Buchanan, who served on the Supreme Court of Virginia since 1946, wrote for the unanimous court decision, holding that the record suggested that Zehmer was not intoxicated to the point of being unable to comprehend the nature and consequences of the instrument he executed. The circumstances surrounding the transaction were such that Lucy was justified in believing that it was a serious business transaction, rather than a mere jest. On the latter point, Buchanan quoted from the Restatement (First) of Contracts: 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.

• Zehmer knew what he was signing, and Lucy had every reason to believe that it was a legitimate business transaction and it wasn’t a joke. There should be specific performance. It is an order to perform the contract as it is written.

Criticisms:

• Lucy was actually in the business of going around to buy property and resell them for huge profit. It is likely that Zehmer wouldn’t have sold the land for 50k. Some commentaries alleged that Lucy had the intention of intoxicating the party or “bombed out of their mind” so that they sign the contract.
• It begs the question of how can you enter a contract if you are not sober.
• Lucy is shady and commentaries do not agree with the decision because it was alleged that it is a recurring thing.

Then, IMPROV!

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LAYING DOWN THE LAW is created by Beyond UNreasonable Doubt and produced by FytePro Productions (fytepro.com). Theme music by David Felton. Cover Art by Q (@TheMightyQWorks). Follow Billy DeClercq on Twitter: @MaxHeadroomEsq or the show @ComedyLawyer

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Creators & Guests

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