ANSWER WITH THE SHORTEST ANSWER AND DO NOT ADD REFERENCES OR CITATIONS
Sherman is a money manager in New York. He is brilliant and successful, but he has always suffered from bipolar disorder, which means that his mood will often swing sharply between almost manic enthusiasm and bouts of deep depression. In recent years the disorder has become more severe. He has prescription medication to deal with it, but he is not good about taking the medication regularly. One day, while playing golf at a private course where he was taken by a friend, he starts chatting with the clubhouse manager. The manager mentions that the club has not been profitable lately and that the property is for sale, perhaps to a developer who will convert it into another use. Sherman is intensely interested. He immediately calls the club president, who puts him in touch with the real estate broker who is representing the property. He meets with the broker a few hours later, gets a few more details. On the spot he agrees to buy the property. He tells the broker that he will pay the full listed price of $3.2 million provided they can get the deal done that evening, saying that he does not want anyone else to have a chance at it. The broker is surprised by the speed of his decision. Sherman waves a hand, gives her a business card, and explains what he does. As a high-level money manager, he is used to making quick decisions, he says, and this is, for him, a relatively small potatoes deal. When you wait around, he says, you lose the chance for a great deal. He who hesitates is lost. A couple of hundred thousand on the purchase price, he says (waving a hand airily) will not make much of a difference in the success of the project he has in mind. He does not say exactly what the project is he has in mind. The broker, excusing herself for a few minutes, ostensibly to go to the restroom, does a quick Internet check and determines that Sherman is exactly who he says he is. She finds him to be loud and overbearing and thinks he laughs too much— sometimes for no apparent reason—but his credit is good. She quickly prepares a brief memorandum which they both sign. Sherman hands her a personal check for $50,000 as earnest money. The next day she deposits the check and it clears without difficulty. Right about the same time, though, Sherman tries to kill himself with a kitchen knife, slashing his wrists in the bathtub. He is not successful. Discovered by his housekeeper, he is rushed to the hospital for treatment. He is examined thoroughly. Physicians from the hospital will testify he had previously tried to kill himself and had stopped taking his medication. On the night of the golf course deal, they will testify, Sherman was under the influence of his disorder and unable to make fully rational decisions.
Sherman wants to get out of the golf course deal, saying that he was in the manic stage of his disorder and should not be held to the deal. The golf course owners want to hold him to it.
Can Sherman void the deal on grounds of incapacity? How would this problem come out if Pennsylvania law (see Review Question 5, below) or the approach of the Ortelere dissent applied, rather than the New York law stated by the Ortelere majority?
Review Question 5. In McGovern v. Commonwealth, 512 Pa. 377, 517 A.2d 523 (1986), a case with nearly identical facts, the Pennsylvania Supreme Court rejected Ortelere, and refused to adopt the Restatement § 15 test. The court reiterated the traditional test: Under Pennsylvania law, it is presumed that an adult is competent to enter into an agreement, and a signed document gives rise to the presumption that it accurately expresses the state of mind of the signing party.” Mere mental weakness, if it does not amount to inability to comprehend the contract, and is unaccompanied by evidence of imposition or undue influence, is insufficient to set aside a contract. Finally, a presumption of mental incapacity does not arise merely because of an unreasonable or unnatural disposition of property.
