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Farnum v. Silvano - 27 Mass. App. Ct. 536, 540 N.E.2d 202 (1989)

Rule:

Competence to enter into a contract presupposes something more than a transient surge of lucidity. It involves not merely comprehension of what is going on, but an ability to comprehend the nature and quality of the transaction, together with an understanding of its significance and consequences.

Facts:

When she sold her real estate in South Yarmouth on July 14, 1986, Farnum was 90 years of age. The sale price was $64,900. At that time, the fair market value of the property was $115,000. At the closing, the buyer, Silvano, obtained a mortgage loan from a bank of $65,000. Silvano, age 24 knew Farnum from mowing her lawn and doing other landscape work. Farnum trusted him and had confidence in him. Before entering into the transaction, Silvano had been put on notice of the inadequacy of the price he was going to pay. He had been warned not to proceed by Farnum's nephew, Harry Gove, who is now Farnum's guardian and is pressing this action for rescission on her behalf.

Issue:

Did the homeowner possess the mental competence to execute the deed of sale with defendant buyer?

Answer:

No

Conclusion:

On appeal, the court found that the aunt was 90 years old and suffering from mental illness which prevented her from possessing the requisite contextual understanding to execute a contract at the time she executed the deed in question. The court found it decisive that the laborer had been put on notice by the nephew that the purchase price was far less than the property's fair market value and that he was aware of the aunt's inability to act in a reasonable manner. The court found that the aunt faced growing cash demands for her maintenance, and, in her circumstances, it was not rational to part with a major asset for a cut-rate price. The court held that because the aunt lacked the capacity to enter into contractual arrangements for the sale of her house, she was entitled to rescission of the conveyance. Competence to enter into a contract presupposes something more than a transient surge of lucidity. It involves not merely comprehension of what is "going on," but an ability to comprehend the nature and quality of the transaction, together with an understanding of its significance and consequences. The court directed the laborer to deliver a deed to the real estate in question to the guardian in his capacity as such, in return for the consideration paid by the laborer. The court vacated the judgment and remanded the case to the probate court for the entry of a judgment of rescission.

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