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Farnum v. Silvano | 427 Mass. App. Ct. 536 (1989)

Generally, if an incompetent person enters into a contract, that contract is voidable at the incompetent person’s election. In determining incompetence, there are two tests: first, under the majority cognitive test, if the person is so deprived of his or her mental faculties that he or she can’t understand or comprehend the nature or consequences of the transaction; and second, under the minority affective test, if the person is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of the condition. In the 1989 case Farnum versus Silvano, the Massachusetts Court of Appeals considered whether a real estate contract between an elderly woman and a young man was voidable by reason of incompetence.

Viola Farnum was a ninety-year-old woman with dementia who owned a home in South Yarmouth, Massachusetts. Joseph Silvano was a twenty-four-year-old man who knew Farnum from mowing her lawn and doing other landscape work for her.

On July 14th, 1986, Farnum and Silvano entered into a contract for the sale of Farnum’s home. At the time, the fair market value of Farnum’s home was one hundred fifteen thousand dollars. Nonetheless, Farnum agreed to sell the home for sixty-four thousand nine hundred dollars. In addition, Farnum was represented in the sale by a lawyer selected and paid for by Silvano.

At closing, which took place at Farnum’s home, Farnum’s lawyer and a lawyer from Silvano’s bank were in attendance. While signing the real estate contract, Farnum was generally aware of what was going on. But shortly afterward, Farnum told others that she still owned the home and was ambivalent about giving up her home and going into a nursing home.

Following the sale, Farnum’s nephew, who was also Farnum’s guardian, filed an action against Silvano in state probate and family court to rescind the contract. At trial, evidence showed that Farnum’s mental competence had begun to deteriorate three years before the sale. Nevertheless, the court refused to rescind the contract, concluding that, at the time of the sale, Farnum was lucid and competent to contract. Farnum appealed to the Massachusetts Court of Appeals.

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