FORT LAUDERDALE BUSINESS LITIGATION: UNILATERAL MISTAKE

The existence of a unilateral mistake contract defense was confirmed by the Florida Supreme Court in Maryland Cas. Co. v. Krasnek, 174 So. 2d 541 (Fla. 1965). The Florida Supreme Court stated, “[a]lthough there is little doubt that the statement in the District Court’s opinion that unilateral mistake provides no basis for rescission of a contract or for other equitable relief therefrom, represents the majority view, we are of opinion that it does not accurately reflect Florida case law.” This holding enshrined unilateral mistake contract defense. Employing a unilateral mistake contract defense can provide a powerful tool in litigation because its successful application allows courts to rescind the contract in dispute. Langley v. Irons Land & Development Co., 114 So. 769 (Fla. 1927); (holding in favor of rescission on the ground of unilateral mistake). Courts can rescind the contract because there was no meeting of the minds. Rock Springs Land Co. v. West, 281 So. 2d 555 (Fla. 4th DCA 1973) (“The evidence is clear and uncontradicted that the figure which Mr. Conner furnished to the buy[er]s was a result of a unilateral mistake…[therefore t]here was no basis in this evidence for the court to conclude that the parties had reached an accord and satisfaction or that they had intended the sum of $446.57 to be payment in full…”). Courts may instead refuse to enforce the agreement, even in restrictive covenant non-compete lawsuits. Oce N. Am., Inc. v. Caputo, 416 F. Supp. 2d 1321 (S.D. Fla. 2006) (“Plaintiff has not met its burden in overcoming Defendant’s unilateral mistake defense and has not established a substantial likelihood that the [non-compete] contract is enforceable.”). The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Historically, there has been dispute concerning the elements needed to establish the existence of a unilateral mistake. One line of cases determined that litigants advancing the unilateral mistake contract defense must prove the mistake was induced by the party seeking to benefit from the mistake. See Rachid v. Perez, 26 So. 3d 70 (Fla. 3d DCA 2010) (holding that “[under Florida law, the party seeking rescission based on unilateral mistake must establish that: (1) the mistake was induced by the party seeking to benefit from the mistake, (2) there is no negligence or want of due care on the part of the party seeking a return to the status quo, (3) denial of release from the agreement would be inequitable, and (4) the position of the opposing party has not so changed that granting the relief would be unjust.”). Conversely, another line of cases excluded the requirement of inducement to establish unilateral mistake. See U.S. Alliance Corp. v. Tobon, 715 So. 2d 1122 (Fla. 3d DCA 1998). The court in DePrince v. Starboard Cruise Servs., Inc., 271 So. 3d 11 (Fla. 3d DCA 2018) addressed the division in legal requirements and determined a party does not need to prove he or she was induced into making the mistake to avail themselves of the unilateral mistake defense. DePrince, 271 So. 3d 11 (“We conclude that a party seeking rescission of a contract based on a unilateral mistake does not have to prove that she was induced into making the mistake by the other party, and affirm the judgment for Starboard.”). Therefore, the elements required to establish unilateral mistake are the existence of a “mistake was not the result of an inexcusable lack of due care;… denial of release from the contract would be inequitable; and… the other party to the contract has not so changed its position in reliance on the contract that rescission would be unconscionable.” Can Fin., LLC v. Niklewicz, 307 So. 3d 33 (Fla. 4th DCA 2020).

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.