## Facts

- Viola Farnum, age 90, suffered progressive cognitive decline, including diagnosed organic brain disease and dementia, and displayed persistent confusion and irrational conduct over several years.
- Joseph Silvano III, age 24, performed yard work for Farnum, gained her trust, and negotiated to buy her South Yarmouth home.
- On July 14, 1986, Farnum conveyed the property to Silvano for $64,900, although its fair market value was about $115,000.
- Silvano obtained a $65,000 bank mortgage in connection with the purchase.
- Farnum’s nephew (later guardian), Harry Gove, warned Silvano about the inadequacy of the price and urged him not to proceed.
- Silvano arranged and paid for the lawyer who represented Farnum at the closing.
- After the conveyance, Farnum’s condition worsened, leading to hospitalization and the appointment of a guardian.

## Issues

1. What legal standard governs mental capacity to enter into a contract for the sale of real property, as distinct from testamentary capacity.
2. Whether Farnum lacked contractual capacity at the time of the conveyance and, if so, whether the deed was voidable because Silvano knew or had reason to know of her condition.

## Decision

- The Appeals Court reversed the Probate Court’s denial of rescission.
- The court held the Probate Court used an incorrect “lucid interval” approach associated with testamentary capacity rather than the proper standard for contractual capacity.
- Applying the Restatement (Second) of Contracts § 15 framework, the court concluded Farnum lacked capacity to contract and Silvano had reason to know of her impairment.
- The court ordered rescission of the conveyance.

## Legal Principles

- Contractual capacity is assessed under a more demanding standard than testamentary capacity; a brief appearance of lucidity may be insufficient for a complex bilateral transaction.
- A real estate contract is voidable for mental incapacity if, due to mental illness or defect, a party (1) cannot understand the nature and consequences of the transaction, or (2) cannot act reasonably in relation to the transaction and the other party knows or has reason to know of the condition.
- Gross inadequacy of consideration, combined with evidence of cognitive impairment and the counterparty’s notice or overreaching, supports voidability and equitable rescission.
- Rescission is an appropriate remedy to restore the parties to their pre-transaction positions when a conveyance is voidable for incapacity and the buyer proceeds despite warning signs.

## Conclusion

The court set aside an elderly seller’s deed because contractual capacity requires more than a momentary “lucid interval,” and the buyer’s knowledge of the seller’s deterioration and the markedly inadequate price made the transaction voidable under Restatement § 15.


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