9.2 Florida Contract Law Distinctions

9.2 Florida Contract Law Distinctions

While contract law in Florida is largely grounded in the common law and the Uniform Commercial Code (UCC) for the sale of goods, the state has enacted specific statutory modifications and common law expansions. These distinctions, particularly within the Statute of Frauds and the enforcement of restrictive covenants, are heavily tested on the Florida Bar Exam.

The Florida Statute of Frauds (Fla. Stat. § 725.01) and Key Extensions

The Statute of Frauds requires certain agreements to be in writing and signed by the party to be charged in order to be legally enforceable. Florida recognizes the standard common law categories (frequently remembered by the acronym 'MY LEGS'): contracts in consideration of marriage, contracts that cannot be performed within one year, contracts for the transfer of an interest in land, executor-administrator contracts, contracts for the sale of goods priced at $500 or more (under UCC Article 2), and suretyship contracts.

In addition to these standard categories, Florida has expanded the Statute of Frauds to include several unique state-specific extensions:

1. Medical Treatment Guarantees: Under Fla. Stat. § 725.01, any guarantee, warranty, or assurance as to the results of any medical, surgical, or diagnostic procedure performed by a licensed physician, chiropractor, podiatrist, or dentist must be in writing. This protects medical professionals from patients claiming that a doctor orally promised a specific successful outcome.
2. The Florida Credit Agreement Act (Fla. Stat. § 687.0304): A debtor cannot maintain an action against a financial institution to enforce a credit agreement—such as an agreement to lend money, extend credit, delay repayment, or make any other financial accommodation—unless the agreement is in writing, expresses consideration, and is signed by both the debtor and the financial institution. This prevents borrowers from claiming that a bank officer orally promised to extend or modify a commercial loan.
3. Promise to Pay a Debt Barred by the Statute of Limitations (Fla. Stat. § 95.04): Once the statute of limitations on a debt has expired, any subsequent promise by the debtor to pay that debt is unenforceable unless the promise is made in a writing signed by the debtor.
4. Newspaper Subscriptions: Agreements for subscriptions to newspapers or other publications must be in writing if the duration is more than one year.

Part Performance Exception to the Statute of Frauds

For oral contracts involving the conveyance of real property, a buyer can overcome the Statute of Frauds defense by showing part performance. In Florida, courts strictly apply a three-part test. To enforce an oral land contract, the plaintiff must prove:

1. Payment of all or part of the purchase price;
2. Actual, physical possession of the property by the buyer; and
3. Valuable and permanent improvements made to the property by the buyer (or, in rare cases, facts showing that failure to enforce the contract would result in fraud or unjust enrichment). All three elements must be present concurrently for the oral contract to be taken out of the Statute of Frauds.

Restrictive Covenants and Non-Compete Agreements (Fla. Stat. § 542.335)

Contracts that restrict competition, such as non-compete, non-solicitation, and non-disclosure agreements, are generally disfavored as restraints of trade. However, Florida has codified a comprehensive statutory framework under Fla. Stat. § 542.335 that permits these covenants if they meet strict criteria.

Statutory Validity Requirements

To be enforceable under Florida law, a restrictive covenant must:

1. Be in Writing: The agreement must be in writing and signed by the person against whom enforcement is sought.
2. Protect a Legitimate Business Interest (LBI): The party seeking enforcement must plead and prove the existence of one or more legitimate business interests. The statute defines LBIs to include trade secrets, valuable confidential business or professional information, substantial relationships with specific prospective or existing customers, patients, or clients, customer/patient/client goodwill associated with an ongoing business, and extraordinary or specialized training provided to the employee.

Rebuttable Presumptions of Reasonableness

The covenant must be reasonable in time, geographic area, and line of business. Florida law establishes rebuttable presumptions based on the duration of the restriction:

• Former Employees, Agents, and Contractors: A restriction of 6 months or less is presumed reasonable, while a restriction of more than 2 years is presumed unreasonable.
• Sellers of a Business: A restriction of 3 years or less is presumed reasonable, while a restriction of more than 7 years is presumed unreasonable.
• Distributors, Dealers, or Licensors: A restriction of 1 year or less is presumed reasonable, while a restriction of more than 3 years is presumed unreasonable.

Mandatory Judicial Modification (Blue-Penciling)

Unlike jurisdictions that invalidate an entire non-compete agreement if a single term is found to be overbroad, Florida requires a court to modify the contract. If a restrictive covenant is found to be overbroad, too long, or geographically unreasonable, the court must modify the covenant and enforce it to the extent necessary to make it reasonable.

Exclusion of Hardship Defense

In a critical pro-business departure, Florida law explicitly prohibits courts from considering the individual economic or personal hardship that enforcement of the covenant would cause the employee. The court may only consider whether the restriction is necessary to protect the employer's LBI and whether the restriction is overbroad or unnecessary.

Prevailing Party Attorney's Fees

By statute, the prevailing party in an action to enforce or challenge a restrictive covenant is entitled to recover their reasonable attorney's fees and costs from the non-prevailing party.