Whiskey and jokes as contract defenses?
Updated: Nov 28, 2019
Lucy v. Zehmer (Va. 1954)
Two men are drinking whiskey on the Saturday night before Christmas. One of the men, Hardy Zehmer, will later claim that he was "high as Georgia pine" and the whole thing was “just a bunch of two doggoned drunks bluffing to see who could talk the biggest” — but back to the scene.
The other man, Welford Lucy, says he’ll buy Zehmer’s farm for $50,000. "I was already high as a Georgia pine," Zehmer recalls, "and didn't have any more better sense than to pour another great big slug out and gulp it down, and he took one too."
Lucy reiterates, "I bet you wouldn't take $50,000 cash for that farm." Zehmer replies, "You haven't got $50,000 cash." Lucy says, "I can get it." Zehmer takes a scrap of paper and scribbles he agrees to sell the farm for $50,000. Whoops.
It turns out Lucy that wasn’t bluffing. He takes the paper and says "Let me give you $5" as a deposit. Zehmer responds, "No, this is liquor talking. I don't want to sell the farm, I have told you that I want my son to have it. This is all a joke." Lucy, however, gets up and heads to the door saying, "Zehmer, you have sold your farm."
The case makes its way up to the Virginia Supreme Court, where Zehmer argues that he was joking and drunk to boot. Valid defenses? Virginia Supreme Court: in this case, no.
Virginia follows the objective theory of contracts. When a person's "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." And here, the court concludes, a reasonable person wouldn't have known Zehmer was joking.
Moreover, though the circumstances "disclose some drinking by the two parties" (as the court politely puts it), the men weren't so drunk as to be incapable of understanding what they were doing. So it turns out Lucy was right: "Zehmer, you have sold your farm."
Bottom line: Under the objective theory of contracts, what counts is your outward acts, not your inner thoughts. And though intoxication and jest may be viable defenses in appropriate cases, those cases will be exceptionally rare.
Epilogue: This case was decided by the Virginia Supreme Court in 1954. Since then, it's become a staple of first year law school contracts courses. In 2012 an article in the Duke Law Review delved into the previously unreported story (that didn't make it into the court's written opinion), plus what happened afterwards. It reveals that Lucy was a pulp-and-paper industry middleman. He wanted the farm for its timber. And within eight years of Virginia Supreme Court's decision to enforce the $50,000 sale, Lucy made $142,000 from the land and its natural resources.