Two, Three, or Four Prongs? The Contractual Defense of Unilateral Mistake in Florida
Until recently, Florida litigators would have the choice between two and four elements for a unilateral mistake defense depending on the court where an action was filed. This is now clarified in the DePrince v. Starboard Cruise Services, Inc., 163 So. 3d 586 (Fla. 3d DCA 2015) (DePrince I) and DePrince v. Starboard Cruise Services, Inc., 271 So. 3d 11 (Fla. 3d DCA 2018) (en banc) (DePrince II) cases, and the elements of this contractual defense are now clear. In DePrince I, the Third District Court of Appeal opted for a four-prong analysis of the defense to contract enforcement on the basis of unilateral mistake instead of a three-prong analysis. The court en banc adopted a three-prong analysis on rehearing. The previous split among the Florida districts could have been resolved by the Florida Supreme Court, but it is argued that the Third District’s en banc rehearing, which moved that district in line with other districts, has likely resolved the issue whether there are three or four prongs to the unilateral mistake defense. An understanding of what necessitated this reconciliation is instructive and would make practitioners more effective in the use of all contractual mistake defenses to enforcement. First, the level of discretion afforded to courts exercising their equitable authority may explain the previous variances between district courts of appeal regarding the number of elements establishing unilateral mistake. Overlap between equitable defenses may also be a factor. Second, there are foundational and historic differences between the contractual defenses of rescission/cancellation, on the one hand, and reformation on the other, which elucidate a possible reason for lack of judicial conformity. Added together, it is not surprising that this set of issues was not fully decided until 2018 in what appears now to be a unified position by all Florida districts.
Case History — DePrince I and DePrince II
The series of events in the DePrince cases began in February 2013 when DePrince visited a jewelry shop onboard one of Starboard Cruise’s ships. Starboard’s jewelry shop, which maintained a consignment arrangement with a jewelry supplier, sold loose gemstones; DePrince was interested in purchasing a large diamond between 15 and 20 carats. The sales manager contacted the supplier for a quote, and the price of $235,000 was given for the 20.64-carat diamond that DePrince ultimately contracted to purchase.
Subsequently, Starboard learned that the $235,000 quoted price was actually per carat, for a total value of $4,850,400. Starboard contacted DePrince and explained the error but DePrince insisted that the parties complete the sale. Starboard reversed the charges on DePrince’s credit card and informed him that the sales agreement had been repudiated. As a result, DePrince filed suit on multiple counts, including breach of contract. Starboard moved for summary judgment based on the fact that there had been a unilateral mistake concerning the diamond’s price. The trial court ruled in favor of Starboard and granted the summary judgment motion.
On appeal, the Florida Third District Court of Appeal reviewed whether the trial court should have granted summary judgment based on the tests for unilateral mistake. The Third District noted three tests to determine whether unilateral mistake should be a basis for rescinding a contract. The first, a two-prong test, articulated the following elements: “(1) the mistake did not result from an inexcusable lack of due care, and (2) defendant’s position did not so change in reliance that it would be unconscionable to set aside the agreement.” The second test, a three-prong test stated in Florida’s jury instructions, noted the following elements: “1. (Defendant) was mistaken about (insert description of mistake) at the time the parties made the contract; 2. [The effect of the mistake is such that enforcement of the contract would be unconscionable] [or] [(Claimant) had reason to know of the mistake or [he][she][it] caused the mistake.] and 3. (Defendant) did not bear the risk of mistake….” The Third District ultimately selected a four-prong test, articulating the following elements:
(1) [T]he 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 had not so changed that granting relief would be unjust.
When it applied the facts of the case to the four-prong test, the Third District held that there were factual disputes at issue. In particular, the defendant was unable to produce evidence regarding whether DePrince induced Starboard into making the pricing mistake. In addition, as to the second element, the issue whether Starboard made a reasonable mistake or acted negligently, was also a factual inquiry. Though the Third District determined that the trial court’s grant of summary judgment was inappropriate, based on the four-prong test, it further articulated that neither of the other two tests would have given cause to grant summary judgment. In regard to the two-prong test, the first element also required an inquiry into whether Starboard was unduly negligent when it formed the contract, thus leaving a factual dispute. And though no Florida decision adopted or cited the three-prong test, it also would have left a factual question as to whether Starboard bore the risk of mistake. As a result, the Third District reversed and remanded the case.
On remand, the jury found that Starboard committed a unilateral mistake and, thus, was excused from performing under the contract. The trial court denied DePrince’s motion for a directed verdict and entered judgment for Starboard. Defendant appealed the second verdict, and the district court of appeal reversed and remanded for a new trial because the trial court’s unilateral-mistake jury instruction was inconsistent with the first DePrince trial. Starboard moved for rehearing en banc to resolve which test for unilateral mistake the trial court should apply and, more particularly, whether some level of inducement by the party seeking to enforce was an element of the defense.
On rehearing, the Third District Court of Appeal reviewed a series of prior cases that did not require the element of inducement for the unilateral-mistake defense. However, there was a series of cases where the opinions stated “the mistaken party had to show it was induced into making the mistake by the other party.” The Lechuga court included an “inducement” element even though two previous cases in the same district did not. Taking these cases into consideration, the Third District held that inducement was not a requirement of the unilateral-mistake defense. First, it articulated that inclusion of the inducement element was inconsistent with the Florida Supreme Court’s Krasnek opinion. In addition, the Florida Supreme Court adopted standard contract jury instructions and referenced the Third District’s case, Pennsylvania Nat. Mut. Cas. Ins. Co. v. Anderson, 445 So. 2d 612 (Fla. 3d DCA 1984), both of which omitted references to the inducement element. Finally, Florida’s First, Second, Fourth, and Fifth district courts of appeal also did not include the inducement requirement. Thus, the Third District held that inducement was not an element of a unilateral-mistake defense and affirmed the trial court’s judgment for Starboard.
The method followed in the appellate processes of DePrince II is instructive in light of the fact that the controversy involved conflicting positions on the elements of unilateral mistake within and between the Florida district courts of appeal. The conflict between district courts of appeal could justify invocation of the Florida Supreme Court’s discretionary jurisdiction. Experience indicates that this mechanism, though available, is generally disfavored for the hurdles of establishing Supreme Court jurisdiction. Perhaps in light of the Florida Supreme Court’s hesitancy to accept discretionary appeals, the Third District Court of Appeal conducted a hearing en banc to resolve the differing treatment. The Third District’s adoption of the three-prong standard at issue here appears also to have removed any conflicts between district courts of appeal by bringing the final hold-out on board. Thus, there is a solidified approach now in line with the Florida Jury Instructions on this topic.
As noted in DePrince II, the keystone opinion for guidance is that of Maryland Casualty Co. v. Krasnek, 174 So. 2d 541 (Fla. 1965). In that case, it was ruled that the elements of unilateral mistake are as follows: 1) the mistake or negligence is not a breach of a legal duty; 2) the mistake is material; and 3) circumstances are such that granting rescission or cancellation is appropriate to deny the party against whom the defenses are asserted the benefit of the bargain “even though he did not by commission or omission contribute to the mistake….” It is noteworthy that the appellant’s claims did not include a prayer for the equitable remedy of reformation, which may require different treatment than that afforded rescission. In cases of requested rescission or cancellation, the specter of a legal decision on formation, i.e., whether the parties possessed the necessary intent(s), looms large. Return to the status quo ante is not a major stretch where there is no serious, detrimental reliance on the part of one of the parties to an agreement. Nevertheless, successful assertion of the defense would deny one of the parties the benefit of the bargain.
The first complicating factor stems from the fact that the use of any of the contractual defenses is very often intertwined with a court’s equitable jurisdiction. The penultimate goal when crafting damages is to permit a non-breaching party in a position to recover the benefit of its bargain. When legal damages (or legal solutions) are not availing, courts turn to their equitable jurisdiction. Courts of equity are courts of conscience, which should not be shackled by rigid rules of procedure, and inherent in a court’s equitable powers is the authority to prevent injustice engendered by fraud, accident, or mistake. There is some interplay between the legal defenses to contract enforcement and equitable concerns in the nature of ‘forgivable mistake.’ Ultimately, the goal is to clarify the legal defenses from truly equitable ones, and if there is overlap, ensure that the equitable elements or prongs are self-contained so that any equitable balancing involves those elements or prongs without spilling into a less structured conclusion.
Second, there is a distinction between the equitable remedies of rescission and reformation that may further blur the lines. The Florida Supreme Court and a few others have ruled that reformation is not appropriate except for mutual mistake, but other Florida courts have extended it in the case of unilateral mistake where there is some form of inequitable conduct or inducement by the party seeking to avoid the defense. This begs the question whether the defense of unilateral mistake has two manifestations: one for claimants requesting rescission and another, with an added element, for claimants seeking reformation. Rescission should return the parties to status quo ante; reformation calls for a court, looking at the parties’ intent, to “rewrite” the agreement. The latter is more extreme and against the longstanding principle of court hesitancy to rewrite contracts. The Florida courts have long endeavored to refrain from the rewriting of terms in contracts. Apparently, some bad act by the party seeking to enforce an agreement could under more extenuating circumstances, however, convince a court to rewrite a portion of an agreement.
Third, the defense of unilateral mistake includes elements of “excusable neglect” and/or that the petitioner does not “bear the risk” of the fault in question. These implicate factual complications and equitable concerns that may only be addressed on an ad hoc basis. One wonders how often the courts have treated the “inducement” factor as part of one or both of these elements of unilateral mistake rather than as a separate element. The DePrince case is a prime example for the jewelry expertise arguably possessed by the party claiming the right to enforce the agreement at issue.
Fourth, the courts must take their arguments as presented. Our system is adversarial, and even in equity (with perhaps a bit more flexibility), courts are constrained to consider what parties present. It is not the courts’ role to re-craft a party’s arguments. Whether by choice of the parties or steerage by the courts, assertion of fraud in contracts cases is not undertaken lightly; other arguments devoid of accusations of fraud are more palatable. Additionally, to avoid having to address the fraud question, courts may entertain contractual defense arguments based on mutual mistake, unconscionability and possibly even undue influence (which has an inducement feature balanced with the level of susceptibility, but it is not outright “fraud”). Why find a party guilty of fraud, in a civil case, when a court could reach the same result based on a defense other than fraud? Whereas there is a strong mandate not to rewrite an agreement, courts may try to steer contractual defense arguments to the “non-fraud” ones. This may avoid some embarrassment of a party to a dispute, but it also blurs the lines between which defense best fits a particular set of facts.
As an example, misrepresentation may be implied in certain circumstances even by silence. The level of sophistication of a buyer, with or without expert companions providing knowledgeable advice, might be contrasted to that of an inexperienced shop worker and a busy off-site manager to justify a fraud defense. There may be more going on behind the scenes than shows from published opinions. This makes clarity of the distinct elements of contractual defenses more difficult to reach.
Trying to corral these factors into a single, cohesive approach is no easy task. Albeit a bit simplistic, the various contractual defenses to enforcement may be broken down into three basic categories. The first two categories entail situations where a problem arises during the formation phase. There are the more “innocent” defenses that do not entail a particularly blameworthy element, specifically: unilateral mistake, mutual mistake, and mental incapacity. In contrast, there are defenses that include some blameworthy attribute, namely: fraudulent misrepresentation, undue influence, physical and economic duress. Finally, there is a category of post-formation justification, to wit: acts of God (aka force majeure), impossibility and its sale-of-goods counterpart commercial impracticability, and unconscionability. Working from the premise that clear distinctions between these choices is a valid pursuit, albeit keeping in mind equitable considerations and the broad judicial discretion over same, a clarification that would maintain unilateral mistake in the first category to avoid aspersions of fraud might prove efficacious. This distinction between fraud and factors justifying excusable mistake may not be particularly clear.
To the extent that there is any remaining uncertainty over how and/or when the unilateral mistake defense is to be applied, three possibilities present themselves. First, the bad act of a party seeking to enforce an agreement over objection based on unilateral mistake could be subsumed into the “legally excusable” factor. In other words, the more egregious the inducement (or fraud), the more legally excusable would be the unilateral mistake. This would maintain three elements, with an accretion to one of them. Second, the unilateral mistake defense could be cloven in two but kept as “innocent” defenses: a category for requests for rescission/cancellation, and another for reformation. This would require adding a subfactor for wrongful act or inducement as already recognized by some of the Florida courts and a separate category, i.e., one for “unilateral-mistake: rescission” and another for “unilateral mistake: reformation.” Third, the defense could be cloven in two and the one requiring some form of inducement (a negative factor akin to fraud) could be moved into the category for the more blameworthy, during-formations defenses, most likely for fraudulent misrepresentation. This could perhaps be reconciled, for those cases where there is no overt fraudulent statement(s), by imposing a duty to clarify a known, mistaken fact. In fact, it may be preferable to employ the longstanding and well-known tenet of contract law about good faith and fair dealing. This is a unique “equitable” statutory tool, and failure to speak or to correct despite a demonstrable understanding or expertise may not be in good faith.
Ultimately, the first possibility should prove to be the most efficacious. In short, if there are any negative aspersions to be cast at the party seeking to enforce a contract in the face of a unilateral mistake defense, and to avoid the thorny question of finding such party guilty of some level of fraud, negative aspects should be subsumed in the question of legal excusability. There could be a balancing of what the potential enforcer knows or does, on the one hand, with the inexperience of the party seeking rescission or reform on the other. The basis of this is the good faith that parties are bound to exercise at common law or in the case of the sale of goods. Further, the identification of the proper defense could be required, after which it could be applied regardless whether the relief sought is reformation, rescission, injunction, the removal of injunction, or other remedy.
 De Prince I, 163 So. 3d at 591-92.
 DePrince II, 271 So. 3d at 12.
 De Prince I, 163 So. 3d at 589.
 Id. at 590.
 DePrince v. Starboard Cruise Services, Inc., No. 13CA16523, 2014 WL 10211756 (Fla. Cir. Ct. 2014).
 See generally DePrince I, 163 So. 3d at 586.
 Id. at 591.
 See Garvin v. Tidwell, 126 So. 3d 1224 (Fla. 4th DCA 2010).
 DePrince I, 163 So. 3d at 593.
 Id. at 594 (quoting Fla. Std. Jury Instr. (Civ.) 416.26).
 See Rachid v. Perez, 26 So. 3d 70, 72 (Fla. 3d DCA 2010).
 DePrince I, 163 So. 3d at 592.
 Id. at 593.
 Id. at 593-95.
 Id. at 593.
 Id. at 594.
 Id. at 598.
 DePrince II, 271 So. 3d at 14-15.
 Id. at 15.
 See Maryland Cas. Co. v. Krasnek, 174 So. 2d 541, 543 (Fla. 1965) (stating that there is no basis for equitable relief for instances “in which the mistake is the result of a lack of due care or in which the other party to the contract has so far relied upon the payment that it would be inequitable to require repayment”); see also Pennsylvania Nat. Mut. Cas. Ins. Co. v. Anderson, 445 So. 2d 612 (Fla. 3d DCA 1984); U.S. Alliance Corp. v. Tobon, 715 So. 2d 1122 (Fla. 3d DCA 1998).
 DePrince II, 271 So. 3d at 17.
 See Lechuga v. Flanigan’s Enterprises, Inc., 533 So. 2d 856 (Fla. 3d DCA 1988); Anderson, 445 So. 2d at 612; Tobon, 715 So. 2d at 1122.
 DePrince II, 271 So. 3d at 18.
 Krasnek, 174 So. 2d 541.
 DePrince II, 271 So. 3d at 19; see also In re Standard Jury Instructions — Contracts & Bus. Cases, 116 So. 3d 284, 323-24 (Fla. 2013).
 DePrince II, 271 So. 3d at 19-20.
 Id. at 21.
 See 2 Fla. App. Prac. §21:8 (2019) (stating that intra-district conflicts are to be reconciled using en banc procedures).
 DePrince I, 163 So. 3d 586 (comparing cases from the Third and Fourth district courts of appeal); see also, e.g., Florida Insurance Liability Ass’n, Inc v. Love, 732 So. 2d 456 (Fla. 2d DCA 1999) (two-prong test consistent with “three-prong” analysis if “materiality” is treated as a distinct element); Ferguson v. Cotler, 382 So. 2d 1315 (Fla. 5d DCA 1980) (two-prong test, which converts to three prongs by adding “materiality”).
 Fla. Const. art. V, §§3(b)(3) (involving a direct conflict with another district court of appeal or of the Florida Supreme Court) & 3(b)(4) (where certified by a district court of appeal as involving an issue of great public importance or in direct conflict). Subsection (5) allows discretionary review upon certification by a district court of appeal of a pending appeal that requires immediate review. This would be particularly appropriate, for example, where the case involves issues surrounding an upcoming election. See, e.g., League of Women Voters of Florida v. Detzner, 172 So. 3d 262 (Fla. 2015); Palm Beach County Canvassing Bd. v. Harris, 772 So. 2d 1220 (Fla. 2000).
 See, generally, Tracy S. Carlin, The Ins and Outs of Pass-through Jurisdiction, 80 Fla. B. J. 42 (Dec. 2006); Justice Raoul Cantero, Certifying Questions to the Florida Supreme Court: What’s So Important?, 76 Fla. B. J. 40 (May 2002) (both articles deftly explore the bases for pass-through jurisdiction and the likelihood that the Supreme Court would grant such jurisdiction in its discretion). See also Craig Trocino, Jurisdiction and Review, Fla. App. Prac. 3-1 (11th ed. 2020); Steven Brannock & Sarah Pellenbarg, Supreme Court Proc. and Practices, Jurisdiction & Review, Fla. App. Prac. 4-1 (11th ed. 2020) (publications of The Florida Bar).
 Fla. R. App. P. §§9.331(c) (by that court’s own motion) & (d) (rehearing by the court’s own motion or that of a party).
 See note 41 (discussing certifying questions to the Florida Supreme Court).
 See note 18 and accompanying text.
 A majority of five justices were all in agreement with the opinion.
 Id. at 543 (emphasis added).
 See id. (Immediately following the quoted language, the court opinion clearly distinguished claims involving rescission or cancellation from those involving unilateral mistake). See note 55.
 See, e.g., Basulto v. Hialeah Automotive, 141 So. 3d 1145, 1156 (Fla. 2014) (citing Pepple v. Rogers, 140 So. 205, 208 (Fla. 1932) (discussing rescission based on lack of formation)).
 See, e.g., Perera v. Diolife LLC, 274 So. 3d 1119, 1124 (Fla. 4th DCA 2019); Tubby’s Customs, Inc. v. Euler, 225 So. 3d 405, 407 (Fla. 2d DCA 2017) (stating that preliminary research on this issue did not uncover cases for “benefit-of-the-bargain” rule from the Third District Court of Appeal or from the Florida Supreme Court, although cases implicitly recognizing this exist). See, e.g., Grossman Holdings, Ltd. v. Hourihan, 414 So. 2d 1037 (Fla. 1982).
 See, e.g., Perera, 274 So. 3d at 1124.
 Degge v. First State Bank of Eustis, 199 So. 564, 565 (Fla. 1941).
 Planned Parenthood of Greater Orlando, Inc. v. MMB Properties, 211 So. 3d 918, 925 (Fla. 2017) (standard of proof of changed circumstances to dissolve a temporary injunction); Degge, 199 So. at 565 (equitable power to award a deficiency judgment after foreclosure on mortgage and note); Arsali v. Chase Home Finance LLC, 121 So. 3d 511, 517-18 (Fla. 2013) (avoiding forfeiture of mortgage foreclosure).
 Planned Parenthood of Greater Orlando, 211 So. 3d at 925.
 Continental Casualty Co. v. City of Ocala, 127 So. 894, 896 (Fla. Division B, 1930); Hardaway Timber Co. v. Hansford, 245 So. 2d 911, 913 (Fla. 1st DCA 1971).
 See, e.g., Henson v. James M. Barker Co. Inc., 555 So. 2d 901, 908 (Fla. 1st DCA 1990); Bone & Joint Treatment Centers of America v. Healthtronics Surgical Services, Inc., 114 So. 3d 363, 366 (Fla. 3d DCA 2013).
 See, e.g., Beach Resort Hotel Corp. v. Wieder, 79 So. 2d 659, 663 (Fla. 1955) (en banc); see also Equitable Relief for Unilateral Mistake of Fact, 30 Harv. L. Rev. 637, 637-38 (1917) (stating “[i]t is clear that there can be no reformation to accord with the view of the party in error, for this would be forcing upon the other a contract which he never agreed to make”).
 This leads to yet another complicating factor: Some courts have demonstrated significant hesitancy to upset an agreement reached within another system such as in mediation or alternative dispute resolution tribunal. The First District Court of Appeal, for example, has been more circumspect and has addressed the suitability of reformation (i.e., something greater than rescission or cancellation of an agreement) for fraud. The First District does recognize unilateral mistake, see, e.g., Henson v. James M. Barker & Co., Inc., 555 So. 2d 901 (Fla. 1st DCA 1990), but the First District has decided cases on other grounds, including that cases settled in situations involving mediation of a kind are not suitable for liberal application of the equitable redress generally. See Cordovez v. High-Rise Installation, Inc., 46 So. 2d 1120 (Fla. 1st DCA 2010) (rescission not warranted in the case of a mediated workers’ compensation settlement agreement); Mills v. Mills, 339 So. 2d 681 (Fla. 1st DCA 1976) (reformation in case of a marital property settlement agreement not appropriate based in unilateral mistake).
 DePrince I, 163 So. 3d at 589; DePrince II, 271 So. 3d at 13. The apparent expertise of the buyer and the lack of experience of the seller’s agent, although exacerbated by the possible lack of clarity on the part of the seller’s principal, could justify the defense of unconscionability. The requirements for a defense to enforcement based on unconscionability may be found in Basulto, 141 So. 3d at 1157-58.
 Although most often used in cases of civil procedure, see, e.g., Gosman v. Luzinksi, 937 So. 2d 293 (Fla. 4d DCA 2006), and of right to counsel for a criminal defense, see, e.g., Arbelaez v. Butterworth, 738 So. 2d 326 (Fla. 1999), the tenet of judicial impartiality supports the idea that courts do not readily recraft counsels’ arguments and may explain how certain decisions, perhaps lacking in clarity, are issued.
 See note 55 and accompanying text.
 See Fla. Stat. §672.615(1) (2020) (discussing failure of a presupposed condition,” aka “commercial impracticability”).
 This defense has both during-formation and post-formation facets, i.e., a contract where one party possesses unfair bargaining power (during formation) with results that turn out to be unconscionable (post formation). There is a procedural aspect (some problem such as unfair bargaining power and/or take-it-or-leave it situation) and a substantive one (outrageous degree of unfairness). See Pendergrast v. Sprint Nextel Corp., 592 F. 3d 1119, 1135-36 (11th Cir. 2010) (The Pendergrast case is notable in that it addresses a possible split of authority within the Florida circuit courts over whether analysis should include two independent elements, i.e. procedural and substantive unconscionability, or whether both could be analyzed on a sliding scale. Id. at 1134. This conflict underscores the existence of gray areas in crafting equitable remedies. That more than one equitable defense includes an element of “unconscionability” may also be a factor.).
 DePrince II, 271 So. 3d at 11.
 See, e.g., Cox v. CSX Intermodal, Inc., 732 So. 2d 1092, 1097 (Fla. 1st DCA 1999). It may be possible to also utilize the longstanding and well-known tenet of contract law, for sales of goods, about good faith and fair dealing that is party of a contract for the sale of goods. See also Fla. Stat. §671.203 (good faith is imposed in every contract for the sale of goods). This is a unique “equitable” statutory tool, and failure to speak or to correct despite a demonstrable understanding or expertise may not be in good faith.
 See Fla. Stat. §671.203 (good faith is imposed in every contract for the sale of goods).