PROBATE CORNER
PALM BEACH COUNTY
BAR ASSOCIATION
PROBATE CORNER
Undue Influence – Divergence of Contracts v. Torts
DAVID M. GARTEN
On September 15, 2006, then Chief Justice R. Fred Lewis created the Supreme Court Committee on Standard Jury Instructions— Contract and Business Cases(“ Committee”). After six years, the Contract and Business group filed its report with the Court proposing a complete, stand-alone set of jury instructions for contract and business cases. These jury instructions were approved by the Florida Supreme Court in 2013. See Florida Standard Jury Instructions – Contract and Business Cases, 116 So. 3d 284( Fla. 2013).
In commercial litigation, asserting undue influence to void a business contract, settlement, or partnership buyout is an extraordinarily steep uphill battle. Florida courts strongly adhere to the principle of freedom of contract. They assume that the parties are sophisticated, operate at arm ' s-length, and are responsible for looking out for their own economic selfinterest. With that in mind, the Committee created Fla. Std. Jury Instr. 416.27 titled“ Affirmative Defense- Undue Influence” which reads:“( Defendant) claims that [ he ] [ she ] [ it ] should be able to set aside the contract because( claimant) unfairly pressured [ him ] [ her ] [ it ] into agreeing to the contract. To establish this defense,( defendant) must prove both of the following: 1.( Claimant) used [ a relationship of trust and confidence ] [ or ] [( defendant)’ s weakness of mind ] [ or ] [( defendant)’ s needs or distress ] to control, persuade, or pressure( defendant) into agreeing to the contract; and 2.( Defendant) would not otherwise have voluntarily agreed to the contract.”
This Instruction references the following Sources and Authorities which are consistent with the sources and authorities found in wills / trust disputes: * 1.“ Undue influence must amount to overpersuasion, duress, force, coercion, or artful or fraudulent contrivances to such a degree that there is a destruction of free agency and willpower.” Jordan v. Noll, 423 So. 2d 368, 370( Fla. 1st DCA 1982). * 2.“[ M ] ere weakness of mind, unaccompanied by any other inequitable incident, if the person has sufficient intelligence to understand the nature of the transaction and is left to act upon his own free will, is not a sufficient ground to set aside an agreement.” Donnelly v. Mann, 68 So. 2d 584, 586( Fla. 1953)( citations omitted). ● * 3.“ To constitute‘ undue influence’ the mind … must be so controlled or affected by persuasion or pressure, artful or fraudulent contrivances, or by the insidious influences of persons in close confidential relations with him, that he is not left to act intelligently, understandingly, and voluntarily, but... subject to the will or purposes of another.” Peacock v. Du Bois, 105 So. 321, 322( Fla. 1925)( citation omitted).
The obvious distinction between contract / business disputes and probate / trust litigation is that In re Estate of Carpenter, 253 So. 2d 697( Fla. 1971) and § 733.107( 2), F. S. are not applicable to the defense of undue influence in contract / business disputes.
The following illustrations from the Restatement 2nd of Contracts § 177( as modified) are instructive:
1. A, who is not experienced in business, has for years been accustomed to rely in business matters on the advice of his friend, B, who is experienced in business. B constantly urges A to make a contract to sell to C, B ' s confederate, a tract of land at a price that is well below its fair value. Although A is induced to make the contract, he refuses to transfer the land and is sued by C. A raises undue influence as an affirmative defense. Even though B ' s conduct does not amount to misrepresentation, it amounts to undue influence because A is justified in assuming that B will not act in a manner inconsistent with his welfare, and the contract is voidable by A.
2. A, an elderly and illiterate man, lives with and depends for his support on B, his nephew. B tells A that he will no longer support him unless A makes a contract to sell B a tract of land. Although A is induced to make the contract, he refuses to transfer the land and is sued by B. A raises undue influence as an affirmative defense. Even though B ' s conduct does not amount to duress, it amounts to undue influence because A is under the domination of B, and the contract is voidable by A.
Practitioner’ s Corner: The Carpenter presumption and its progeny and § 733.107( 2), F. S. are limited to actions vacating Wills, Trusts, POD accounts, joint survivorship accounts, and inter vivos gifts. In addition, you cannot challenge the validity of a Will on the basis of undue influence before the death of the testator [§ 732.518 ], and you cannot challenge the validity of a revocable trust on the basis of undue influence until the trust becomes irrevocable by its terms or the death of the settlor [§ 736.0207( 2)]. None of this is applicable to the defense of undue influence in contract / business disputes.
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PBCBA BAR BULLETIN 17