Zehmer owned a 450 acre piece of land in fine Dinwiddie County, Virginia. He also owned a small restaurant. One day, Lucy appeared at the restaurant and offered to buy the land. Zehmer, who had a few drinks and was skeptical that Lucy could come up with that much money, said he was happy to accept the offer. He signed the contract together with his wife, whom he secretly assured that everything was just a joke. A few days later, Lucy told Zehmer of her intention to carry out the contract. Zehmer replied that there was no contract, that everything was a joke. He drank too much that night at the restaurant. It was very clear to him that the contract was frivolous.

Zehmer was surprised that the Virginia Supreme Court recognized the existence of the contract. The court said that it is not so important what Zehmer thinks internally, or whether it is just a joke to him. The court said it was important to determine what a reasonable person in Lucy’s position would think. If Zehmer’s outward acts could lead Lucy to believe that he intended to sell, and based on that belief Lucy entered into a contract, then that contract was binding on Zehmer.

The judgment of the court in Virginia was intended to create legal certainty and encourage the conclusion of contracts. If someone could enter into a contract and the next day say that it was all a joke, then the contracting parties can never be sure that they have a contract. This would make people skeptical of contracts and eventually lead to no one making contracts.

Without a consensus (…) that it is important that the Government honors its commitments, there will never be investment…

Ecuador had a disastrous experience when some impromptu officials, applying Zehmer’s logic, came up with the idea of ​​reforming the Hydrocarbons Law and its regulations, in order to ignore the contracts the government made with the oil companies. This came at the cost of millions in prizes, but above all the loss of investment in the hydrocarbon sector. To measure this damage, it is enough to observe that over the past decade, Colombia has doubled its production of barrels of oil, while Ecuador has simply maintained it, despite the fact that oil prices have risen worldwide.

About legal certainty

Without legal certainty, it is difficult to attract investments

The importance of contract compliance is something that must be taken care of for the development of the mining industry. The government must be able to conclude contracts with companies that come to invest in Ecuador in the mining sector and assure them that these contracts will be respected. If the government signs a contract but wants to ignore it the next day or claims it has no control over the mines, the price will be a loss of investment and significant amounts of anti-poverty funds.

Without the consensus of the citizens that it is important that the Government honors its commitments, there will never be quality investments in our country. Zehmer’s vision, so rooted in our culture, that one day I say one thing and the next day I do another, is a condemnation of underdevelopment. (OR)