LABONTE PRECISION, INC., APPELLANT,
v.
LPI INDUSTRIES CORPORATION AND NORMAN O. SAUEY, JR., APPELLEES
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LaBonte Precision sought to stay arbitration of a dispute arising from a contract for the sale of corporate assets, claiming lack of mutuality of remedies. The Fourth District affirmed the trial court's denial of the stay, holding that mutuality of remedies is not required to enforce an arbitration clause in an executed contract with other consideration.
The court held that mutuality of remedies is not essential to enforce an arbitration agreement in an executed contract where there is other consideration for the contract. The trial court properly denied the motion to stay arbitration.
[1] The absence of mutuality of remedies will not destroy an agreement's validity.
[2] A want of mutuality is no defense to an executed contract.
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Join FLexlaw to unlock all legal intelligence“the absence of mutuality of remedies will not destroy an agreement's validity; a want of mutuality is no defense to an executed contract; a promise lacking mutuality at its inception becomes binding on its promisor after performance by the promisee”
Establishes the court's key holding that mutuality of remedies is not required in executed contracts
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Join FLexlaw to unlock all legal intelligenceAfter closing a sales contract to purchase corporate assets, the buyer accused the seller of misrepresenting the business's financial condition. The s…
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GLICKSTEIN, Judge.
We affirm the trial court’s order denying appellant’s motion to stay arbitration, and reject appellant’s reliance upon R. W. Roberts Construction Corp. v. St. Johns River Water Management District, 423 So. 2d 630 (Fla. 5th DCA 1982), as a basis for reversal. In Roberts, the district court of appeal let the trial court’s order stand, denied certiorari, and said, the trial court’s construction of the parties’ contract being reasonable, there was no departure from the essential requirements of law. The Roberts court merely accepted as reasonable the trial court’s finding that mutuality of obligation was lacking, whereas here we may infer the trial court found only that there was no mutuality of remedies.
In this case, after the closing of a sales contract to purchase the assets of a corporation, the buyer accused the seller of misrepresenting the financial condition of the business. Thereafter, the seller sought declaratory relief in the circuit court, whereupon the buyer moved to compel arbitration as per the terms of the contract. The seller moved to stay the arbitration and the trial court denied the motion.
This court has held in Wright & Seaton, Inc. v. Prescott, 420 So. 2d 623, 626 (Fla. 4th DCA 1982), that:
(a) the absence of mutuality of remedies will not destroy an agreement’s validity;
(b) a want of mutuality is no defense to an executed contract;
(c) a promise lacking mutuality at its inception becomes binding on its promisor after performance by the promisee; and (d) where there is no other consideration for a contract, mutual provisions must be binding on both parties, but where there is any other consideration for the contract, mutuality of obligation is not essential.
Further, we find Judge King’s opinion in Kalman Floor Co. v. Joseph L. Muscarelle, Inc., 196 N.J.Super. 16, 481 A. 2d 553 (App.Div.1984), to be persuasive in its reasoning and thoroughness. That opinion, together with Willis Flooring v. Howard S. Lease Construction Co. & Associates, 656 P. 2d 1184 (Alaska 1983), which it quotes, contains citations from Restatement (Second) of Contracts, reflecting the thinking of the American Law Institute. Mutuality of remedy in contracts as a requirement has largely disappeared from the law of American jurisdictions.
Court calendars are crowded, and arbitrators are frequently specialists who have a level of expertise on the disputed issues not likely to be shared by judges. The parties are sophisticated. There is no reason to protect the seller from the implementation of an arbitration clause it freely agreed to.
Affirmed.
ANSTEAD, J., concurs.
LETTS, J., dissents with opinion.
LETTS, Judge,
dissenting.
I would reverse on the authority of R. W. Roberts Construction Corp. v. St. Johns [*1204] River Water Management District, 423 So. 2d 630 (Fla. 5th DCA 1982).
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Avid Eng'g, Inc. v. Orlando Marketplace Ltd., 809 So. 2d 1 (Fla. 5th DCA 2001)…Fla. 5th DCA 1988), we revisited our prior decision in R.W. Roberts. We concluded that the defense of mutuality of obligation was nothing more than a “smoke screen.” Additionally, we agreed with LaBonte Precision, Inc. v. LPI Industries Corporation, 507 So. 2d 1202 (Fla. 4th DCA 1987), which held that: [W]here there is no other consideration for a contract, mutual provisions must be binding on both parties, but where there is any other consideration for the contract, “mutuality of obligation” is not essential…
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Wayne H.L. Rohlfing v. Tomorrow Realty & Auction Co., Inc., 528 So. 2d 463 (Fla. 5th DCA 1988)…there ever, at any one time, any mutuality of obligation or remedy. All option agreements and similar unilateral contracts are obligations binding only one party. We agree with the statement in LaBonte Precision, Inc. v. LPI Industries Corporation, 507 So. 2d 1202 (Fla. 4th DCA 1987) that “[mjutuality of remedy in contracts as a requirement has largely disappeared from the law of American jurisdictions”5 and that: (a) the absence of mutuality of remedies will not destroy an agreement’s validity; (b) a want…
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Beach St. Bikes, Inc. v. Bourgett's Bike Works, Inc., 900 So. 2d 697 (Fla. 5th DCA 2005)…morrow Realty & Auction Co., 528 So. 2d 463 (Fla. 5th DCA 1988), we ... concluded that the defense of mutuality of obligation was nothing more than a “smoke screen.” Additionally, we agreed with LaBonte Precision, Inc. v. LPI Industries Corporation, 507 So. 2d 1202 (Fla. 4th DCA 1987), which held that: [WJhere there is no other consideration for a contract, mutual provisions must be binding on both parties, but where there is any other consideration for the contract, “mutuality of obligation” is not essential…
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Wright & Seaton, Inc. v. Prescott, 420 So. 2d 623 (Fla. 4th DCA 1982)
- R.W. Roberts Constr. Co., Inc. v. ST. Johns River Water Mgmt. Dist. for the Use & Benefit of McDonald Elec. & Repair Serv., Inc., 423 So. 2d 630 (Fla. 5th DCA 1982)