Mental Illness and the right to contract.

• Author: Lee, Robert W.
• Position: Florida

Contractual relationships provide the basis of a significant body of our law, and most lawyers must address contractual issues in their practices. However, many attorneys misunderstand the nature of mental illness and how it affects these legal relationships. If a mentally incompetent individual enters into a contract, under many instances that individual is entitled to disaffirm the contract.[1]

The Florida Supreme Court first set forth the standard for determining mental incompetence in a contract matter in Waterman v. Higgins, 28 Fla. 660, 10 So. 97 (1891). In this case, a decedent's heirs sought to have a deed set aside on the grounds that at the time the deceased executed the deed he was "entirely non compos mentis, insane." Id. at 663, 10 So. at 98. The Supreme Court established the following as the test of mental incompetency in Florida for contract matters: "The sole question is whether [the alleged incompetent], at the time he executed the deed, ha[d] sufficient intelligence to understand fully the nature and effect of the transaction." Id. at 672, 10 So. at 100 (emphasis added).

Several years later, the Florida Supreme Court appeared to reaffirm its position in Douglas v. Ogle, 80 Fla. 42, 85 So. 243 (1920). Here, the court considered whether a trial court acted properly in finding a party incompetent because he did not understand the nature and extent of a transaction in which he had signed a satisfaction of mortgage. Id. at 44, 85 So. at 245. The Supreme Court upheld this ruling, stating that the "law required no more" than a determination of whether the party understood the nature and extent of the transaction. Id. No further requirements were announced for the threshold to be met.

However, a year later, in Travis v. Travis, 81 Fla. 309, 311-12, 87 So. 762,763 (1921), the Florida Supreme Court appeared to add to the incompetency test a requirement that the contractual transaction include "evidence of imposition or undue influence" before it will be set aside.[2] Three decades after the Travis decision, however, in the 1953 case of Donnelly v. Mann, 68 So. 2d 584, 586 (Fla. 1953), citing Douglas, 80 Fla. at 45, 85 So. at 244, the Florida Supreme Court appeared to retreat from Travis by restating the prior Douglas holding, noting that "`mere 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.'"[3]

The test adopted by the Florida Supreme Court comports with the more modern statement of such test in the Restatement. Today in Florida, in the absence of an adjudication of incompetency, the standard to determine incompetency is whether the party is "unable to understand in a reasonable manner the nature and consequences of the transaction."[4] This test is "almost universally accepted by courts nationwide."[5]

With Adjudication of Incompetency

If a person has been adjudicated incompetent, the test of competency...