Title: Friendly Ice Cream Corp. v. Beckner

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
FRIENDLY ICE CREAM 
CORPORATION, ET AL. 
 
v.  Record No. 031640     OPINION BY JUSTICE ELIZABETH B. LACY 
 
 
 
June 10, 2004 
BEATRICE F. BECKNER 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Gaylord L. Finch, Jr., Judge 
 
 
In this appeal we review the chancellor's decree 
rescinding an amendment to a lease because the lease amendment 
was the result of undue influence. 
Facts 
 
Beatrice Beckner and her husband entered into a 
commercial lease with Friendly Ice Cream Corporation 
(Friendly) allowing Friendly to build and operate a retail 
store on property owned by the Beckners.  The lease commenced 
in 1976 with an original term of 15 years.  Friendly could 
exercise five renewal options of five years each.  If all five 
options were exercised, the lease would terminate in 2016.  In 
addition to a monthly base rent, the lease required an annual 
payment of two percent of the store's annual gross sales 
exceeding $275,000 (percentage rent).  FriendCo Restaurants, 
Inc. (FriendCo) operated the retail ice cream store through a 
sublease with Friendly.  In 2001, the lease generated a base 
rent of $1,105.00 per month and a percentage rent of 
$7,984.68, for a total income of approximately $21,200.00. 
 
2
In December 2001, Friendly and FriendCo decided to close 
the retail store.  Fourteen years remained on the lease if the 
renewal option were fully exercised.  Riggs Bank, N.A. 
(Riggs), among others, expressed an interest in acquiring 
Friendly's interest in the lease.  Riggs planned to demolish 
the existing retail building and build a bank building on the 
property.  Riggs was willing to pay Friendly approximately 
$800,000 for terminating the sublease and assigning the lease 
to Riggs if the lease were amended to relieve Riggs from 
payment of the percentage rent. 
 
On December 26, 2001, Sandra L. Hughes, Vice-President 
and Deputy General Counsel for FriendCo, wrote to the Beckners 
seeking their consent to the assignment of the lease to Riggs, 
to the proposed redevelopment of the property, and to an 
agreement that the percentage rent requirement would not apply 
to Riggs' use of the property as a bank.  On January 3, 2002, 
in response to a telephone call from Mrs. Beckner, Hughes went 
to Mrs. Beckner's home and discussed the provisions of a 
proposed amendment to the lease that would meet Riggs' 
conditions for the lease assignment.  At that meeting Mrs. 
Beckner, then widowed and 80 years old, told Hughes that her 
lawyer was Norman Hammer. 
Hughes contacted Hammer and, at Hammer's request, sent 
him a letter dated January 25, 2002, setting out the history 
 
3
of payments made on the percentage rent, offering to increase 
the base rate by $5,000 a year, and proposing an amendment to 
the lease eliminating the percentage rent.  Hammer replied on 
February 20, stating that he had no counter offer and that he 
wanted to confer with Mrs. Beckner's son, Robert O. Beckner. 
In a February 27 telephone call to Hughes, Mrs. Beckner 
stated that Hammer was no longer her attorney and that she 
wanted to meet with Hughes to discuss the amendment to the 
lease.  Hughes went to Mrs. Beckner's home and discussed the 
terms of the proposed amendment to the lease, including the 
offer to increase the annual base rent by $5,000.  Mrs. 
Beckner replied that she wanted the base rate increased by 
$8,940 a year, from $1,105 per month to $1,850 per month.  
Hughes agreed to submit Mrs. Beckner's proposal to Friendly. 
 
On February 28, Hammer sent a facsimile to Hughes 
instructing Hughes not to contact Mrs. Beckner directly and 
terming the "present offer" unacceptable.  Hughes replied by 
facsimile on March 1, telling Hammer that she had met with 
Mrs. Beckner at Mrs. Beckner's request; that Mrs. Beckner 
stated that Hammer no longer represented Mrs. Beckner; that 
Hughes was a principal of FriendCo, the subtenant; and that 
"principals may talk to one another at any time, without going 
through lawyers if they so choose." 
 
4
Hammer met with Mrs. Beckner on March 7, 2002 to discuss 
the amendment to the lease and his representation of her.  
Also present at the meeting were Robert Beckner, Clyde R. 
Christopherson − a lawyer who had also represented Mrs. 
Beckner, and Leroy Jackson, Mrs. Beckner's long-time friend 
and insurance agent.  Mrs. Beckner agreed that Hammer should 
negotiate with Friendly on her behalf regarding the proposed 
amended lease.  Christopherson drafted a letter reflecting 
this decision and, after reviewing the letter with Mrs. 
Beckner on March 8, sent the letter to Hughes' superior, David 
J. Norman. 
 
Mrs. Beckner telephoned Hughes on Friday, March 8, 
reiterated her desire to deal directly with Hughes, and asked 
if Friendly had responded to the increase in base rent that 
Mrs. Beckner had requested.  Hughes told Mrs. Beckner that 
Friendly had agreed to the increase.  Although Mrs. Beckner 
wanted to sign the amendment to the lease immediately, Hughes 
could not meet with her until Monday, March 11.  Hughes sent 
Mrs. Beckner a copy of the amendment to the lease along with a 
copy of Christopherson's March 8 letter and the facsimile 
exchanges between Hammer and Hughes on February 28 and 
March 1. 
On March 11, Hughes arrived at Mrs. Beckner's home, 
reviewed the amendment to the lease with her, and then, at 
 
5
Mrs. Beckner's direction, went with her to the bank where a 
bank employee with whom Mrs. Beckner had dealt in the past 
notarized her signature on the documents.  Hughes then 
presented Mrs. Beckner with a letter Hughes had drafted for 
Mrs. Beckner's signature stating that Mrs. Beckner wanted to 
deal directly with Hughes.  Mrs. Beckner signed the letter. 
Shortly thereafter, Robert Beckner informed Hughes and 
Norman that he was concerned about his mother's actions.  
After receiving copies of the documents Mrs. Beckner had 
signed, Christopherson wrote Norman indicating Christopherson 
considered the documents to be invalid and that the documents 
should be resubmitted to Mrs. Beckner for further 
consideration. 
Proceeding 
On March 22, 2002, Mrs. Beckner filed a bill of complaint 
against Friendly and FriendCo seeking rescission of the 
amendment to the lease on four grounds:  fraud, gross 
inadequacy of consideration, unjust enrichment, and undue 
influence, Counts I through IV, respectively.1  The fraud count 
was dismissed by agreed order prior to trial and Mrs. Beckner 
abandoned the unjust enrichment count at trial.  Friendly and 
FriendCo (collectively "Friendly's") filed a motion for 
                                                          
 
1 A third defendant, DaveCo. Restaurants, Inc., was 
dismissed with prejudice. 
 
6
summary judgment asserting that Mrs. Beckner was not entitled 
to rescission because she had acquiesced to the terms of the 
amended lease when she cashed checks she received pursuant to 
the terms of the amended lease.  The chancellor denied this 
motion as not appropriate for summary judgment. 
 
Following an ore tenus hearing, the chancellor entered a 
decree in favor of Mrs. Beckner on Counts II and IV.  The 
chancellor found that the amendment to the lease was the 
product of undue influence because Mrs. Beckner produced clear 
and convincing evidence that she suffered from great weakness 
of mind, Hughes had a confidential relationship with her 
consisting of a formal and informal relationship regarding 
business matters, and the consideration for the amendment to 
the lease was grossly inadequate and occurred in suspicious 
circumstances.  The chancellor rescinded the amendment to the 
lease and required Mrs. Beckner to pay $5,888.23, the amount 
she received under the amended lease exceeding that which she 
would have received prior to the amendment.  We awarded 
Friendly's an appeal. 
Count IV − Undue Influence 
On appeal, Friendly's raises five assignments of error.  
We first consider the three assignments of error that 
challenge the chancellor's action rescinding the lease 
amendment based on its finding of undue influence. 
 
7
A court of equity will not set aside a contract because 
it is "rash, improvident or [a] hard bargain" but equity will 
act if the circumstances raise the inference that the contract 
was the result of imposition, deception, or undue influence.  
Payne v. Simmons, 232 Va. 379, 384, 350 S.E.2d 637, 640 (1986) 
(quoting Long v. Harrison, 134 Va. 424, 441-42, 114 S.E. 656, 
661-62 (1922)); Jackson v. Seymour, 193 Va. 735, 740-41, 71 
S.E.2d 181, 185 (1952).  To set aside a deed or contract on 
the basis of undue influence requires a showing that the free 
agency of the contracting party has been destroyed.  Tabb v. 
Willis, 155 Va. 836, 858, 156 S.E. 556, 563 (1931); Jenkins v. 
Trice, 152 Va. 411, 429, 147 S.E. 251, 257 (1929).  Because 
undue influence is a species of fraud, the person seeking to 
set aside the contract must prove undue influence by clear and 
convincing evidence.  Redford v. Booker, 166 Va. 561, 574, 185 
S.E. 879, 885 (1936). 
Direct proof of undue influence is often difficult to 
produce.  In the seminal case of Fishburne v. Ferguson, 84 Va. 
87, 111, 4 S.E. 575, 582 (1887), however, this Court 
identified two situations which we considered sufficient to 
show that a contracting party's free agency was destroyed, 
and, once established, shift the burden of production to the 
proponent of the contract.  The first involved the mental 
 
8
state of the contracting party and the amount of 
consideration: 
[W]here . . . great weakness of mind concurs 
with gross inadequacy of consideration, or 
circumstances of suspicion, the transaction 
will be presumed to have been brought about by 
undue influence. 
 
Id.  Thus, if the party seeking rescission of the deed or 
contract produces clear and convincing evidence of great 
weakness of mind and grossly inadequate consideration or 
suspicious circumstances, he has established a prima facie case 
of undue influence and, absent sufficient rebuttal evidence, is 
entitled to rescission of the document.  See also Payne, 232 
Va. at 384-86, 350 S.E.2d at 640-41 (deed rescinded based upon 
grantor's diminished mental capacity and the fact that $5,000,  
without the grantor retaining a life tenancy was grossly 
inadequate consideration); McGrue v. Brownfield, 202 Va. 418, 
425-27, 117 S.E.2d 701, 706-08 (1961) (rescission unavailable 
absent weakness of mind where conveyance of property for 
cancellation of $400 debt secured by deed of trust was not 
grossly inadequate consideration); Foster v. Helms, 169 Va. 
634, 643-45, 194 S.E. 799, 802-03 (1938) (rescission not 
available because grantor competent and agreement to care for 
grantor was not grossly inadequate consideration); Bibby v. 
Thomas, 165 Va. 248, 253, 182 S.E. 226, 228-29 (1935) (deed by 
 
9
elderly, infirm, illiterate woman, conveying property valued at 
$1,200 to caretaker for $100 was rescinded). 
 
The second instance Fishburne identified arises when a 
confidential relationship exists between the grantor and 
proponent of the instrument: 
[W]here one person stands in a relation of 
special confidence towards another, so as to 
acquire an habitual influence over him, he 
cannot accept from such person a personal 
benefit without exposing himself to the risk, 
in a degree proportioned to the nature of their 
connection, of having it set aside as unduly 
obtained. 
 
84 Va. at 112-13, 4 S.E. at 582.  Here, equity considers the 
benefit to the person in the relation of special confidence 
presumptively invalid and, once that relationship and benefit 
is established, the burden of going forward with evidence that 
the transaction was fair rests on the proponent of the 
transaction.  See also Economopoulos v. Kolaitis, 259 Va. 806, 
812, 528 S.E.2d 714, 718 (2000) (the presence of a 
confidential relationship creates a presumption of fraud.); 
Nuckols v. Nuckols, 228 Va. 25, 34-38, 320 S.E.2d 734, 739-41 
(1984) (one seeking rescission has burden to prove 
confidential or fiduciary relationship or other direction and 
control depriving grantor of free volition); Nicholson v. 
Shockey, 192 Va. 270, 275, 64 S.E.2d 813, 816 (1951) (gift 
from mother to son acting as attorney and confidential advisor 
 
10
in transaction is "presumptively invalid;" donee must overcome 
this presumption by clear and convincing evidence); Waddy v. 
Grimes, 154 Va. 615, 647, 153 S.E. 807, 817 (1930) (where a 
deed is made to the wife of the grantor's duly appointed 
committee, the burden of proving that the transactions are 
valid falls on the party seeking to uphold the deed). 
 
Initially, we note that in this case the trial court 
stated that Mrs. Beckner had established "the three elements of 
[the undue influence] presumption."  We assume this refers to 
the statement in Martin v. Phillips, 235 Va. 523, 528, 369 
S.E.2d 397, 400 (1988), that the presumption of undue influence 
arises if weakness of mind, grossly inadequate consideration or 
suspicious circumstances, and a fiduciary or confidential 
relationship are established by clear and convincing evidence.  
As we have discussed, the presumption of undue influence arises 
and the burden of going forward with the evidence shifts when 
weakness of mind and grossly inadequate consideration or 
suspicious circumstances are shown or when a confidential 
relationship is established.  To the extent Martin requires all 
three elements to be shown before the presumption of undue 
influence can be invoked, it is overruled.  Nevertheless, under 
the principles established in Fishburne and subsequent cases, 
the chancellor's findings in this case, if supported by the 
record, entitled Mrs. Beckner to the presumption of undue 
 
11
influence under either situation − a confidential relationship 
or weakness of mind and grossly inadequate consideration or 
suspicious circumstances. 
We now review the chancellor's findings, applying 
established principles of appellate review.  We must accept 
the chancellor's findings of fact unless they are plainly 
wrong or without evidence to support them.  The Dunbar Group, 
LLC v. Tignor, 267 Va. 361, 367, 593 S.E.2d 216, 219 (2004). 
A.  Confidential Relationship 
We begin our review by considering whether the evidence 
supports the finding that Hughes had a confidential 
relationship with Mrs. Beckner regarding matters of business.  
The chancellor did not identify any evidence upon which he 
based his finding.  Mrs. Beckner argues, however, that the 
requisite confidential relationship existed because Hughes 
took "actions expressly designed to . . . ingratiate[ ] 
herself with Mrs. Beckner to the exclusion of Mrs. Beckner's 
attorneys" and "acted virtually as counsel to Mrs. Beckner, 
while adverse to her interests" by giving Mrs. Beckner legal 
advice in explaining sections of the lease and proposed 
amendment. 
 
We have described a confidential relationship as a 
relationship that is 
 
12
"not confined to any specific association of the 
parties; it is one wherein a party is bound to act 
for the benefit of another, and can take no 
advantage to himself.  It appears when the 
circumstances make it certain the parties do not 
deal on equal terms, but, on the one side, there 
is an overmastering influence, or, on the other, 
weakness, dependence, or trust, justifiably 
reposed; in both an unfair advantage is possible." 
 
Trust alone, however, is not sufficient. We 
trust most men with whom we deal.  There must be 
something reciprocal in the relationship before 
the rule can be invoked.  Before liability can be 
fastened upon one there must have been something 
in the course of dealings for which he was in part 
responsible that induced another to lean upon him, 
and from which it can be inferred that the 
ordinary right to contract had been surrendered.  
If this were not true a reputation for fair 
dealing would be a liability and an unsavory one 
an asset. 
 
Hancock v. Anderson, 160 Va. 225, 240–41, 168 S.E. 458, 463 
(1933) (citation omitted).  We have also held that a 
confidential relationship exists between a parent and child 
when accompanied by an attorney-client or principal-agent 
relationship, or between family members when the family member 
provides financial advice or handles the finances of another 
family member.  Economopoulos, 259 Va. at 812-13, 528 S.E.2d 
at 718. 
Mrs. Beckner does not suggest that an attorney-client or 
any other fiduciary relationship existed between herself and 
Hughes; rather Mrs. Beckner suggests that the confidential 
relationship arose from Hughes' "legal advice" on the terms of 
 
13
the lease and amendment and from Hughes' attempt to "exclude 
all others" including Hammer and Christopherson.  Finally, 
Mrs. Beckner argues that the evidence shows that she "liked 
and trusted" Hughes and did not think Hughes "would attempt to 
cheat her."  These conclusions are neither sufficient to 
establish a confidential relationship nor are they supported 
by the evidence. 
The record demonstrates that the relationship between 
Mrs. Beckner and Hughes had the hallmarks of a business 
relationship, not those of a confidential relationship.  There 
was no history of financial interaction of any kind between 
Hughes and Mrs. Beckner.  Compare Nicholson, 192 Va. at 278, 
64 S.E.2d at 818 (business relationship between mother and son 
existed over period of years); Jackson, 193 Va. at 737-38, 71 
S.E.2d at 183 (brother managed and rented sister's land).  The 
relationship was of short duration, consisting of 
approximately eight contacts beginning on December 26, 2001 
and ending on March 11, 2002, six of which Mrs. Beckner 
initiated.  When Mrs. Beckner initially told Hughes that 
Hammer was representing her, Hughes contacted Hammer and sent 
him a copy of the proposed amendment to the lease. 
Mrs. Beckner testified that she knew Hughes was "with 
Friendly's," that the percentage rent under the lease was 
going down every year, that some Friendly's stores were 
 
14
closing in the area, and that she would not receive any 
percentage rent if the store on her property closed.  The 
record is clear that during the course of this three-month 
relationship, Mrs. Beckner did not allow Hughes to make 
decisions for her regarding the second amendment to the lease.  
In fact, Mrs. Beckner negotiated a monthly base rent higher 
than the rate Hughes proposed.  Mrs. Beckner received a copy 
of the proposed amendment to the lease in advance of signing 
it and she chose the bank and bank employee who notarized her 
signatures on the amendment to the lease. 
Hughes testified that she considered Mrs. Beckner to be 
her landlord and that negotiations regarding the second 
amendment to the lease involved "[d]ealing with the other 
side."  
The relationship Hughes and Mrs. Beckner described did 
not involve any requirement that Hughes act on Mrs. Beckner's 
behalf, nor did either party presume that Hughes should or 
would do so.  Although Mrs. Beckner may have liked and trusted 
Hughes, such trust alone is insufficient to establish a 
confidential relationship.  Hancock, 160 Va. at 240-41, 168 
S.E. at 463.  The record at most reflects a commercial 
relationship in which the parties trusted each other. 
Mrs. Beckner failed to carry her burden of proof to show 
she and Hughes had a confidential relationship, formal or 
 
15
informal, regarding matters of business.  Thus, she was not 
entitled to the presumption of undue influence and would not 
be entitled to judgment in her favor on this basis. 
B.  Mental Status and Consideration 
The chancellor also found that Mrs. Beckner was entitled 
to a presumption of undue influence because she suffered from 
"great weakness of mind," and that the consideration she 
received was grossly inadequate and the transaction occurred 
under suspicious circumstances.  Again, although the 
chancellor did not identify the evidence upon which he based 
these findings, Mrs. Beckner points to a number of factors 
which she asserts support the chancellor's findings. 
Beginning with the adequacy of the consideration, Mrs. 
Beckner first claims that under the original or amended lease, 
the base rent was "significantly below prevailing market 
rates."  Mrs. Beckner claimed that the rental value of the 
property "had risen dramatically" and, according to her expert 
witness, the current fair market rental value would be between 
approximately $5,000 and $8,000 a month.  However, Mrs. 
Beckner's expert did not consider the impact the outstanding 
lease would have on the fair market rental value of the 
property.  The chancellor, while refusing to strike the 
testimony of this expert, considered it "weightless."  We 
agree with the chancellor that evidence of current fair market 
 
16
rental value without consideration of the existence of the 
lease or its conditions is not probative of whether the 
consideration for the amendment to the lease is grossly 
inadequate. 
Next, Mrs. Beckner argues that the consideration was 
grossly inadequate because the increase in base rent contained 
in the amendment did not significantly increase the annual 
amount she received compared to the aggregate amount of base 
and percentage rent she received under the lease before the 
amendment.  The base rent in the amended lease produced only 
$80 a month more than she received in 2001 from the combined 
base and percentage rents, thereby making the consideration 
received grossly inadequate, according to Mrs. Beckner. 
 
We disagree.  The increase in the base rate was in an 
amount Mrs. Beckner specifically requested.  Over the likely 
lifetime of the amended lease, Mrs. Beckner would receive 
$310,800 in base rent, $125,160 more than she would have 
received in base rent without the amendment.  The record also 
shows that the percentage rent in 2001 declined from the prior 
year.  There is no evidence in the record that the value of 
percentage rent would remain at 2001 levels or would increase.  
Although Mrs. Beckner labels as speculative the suggestion 
that Friendly's would or could close the retail store, thereby 
discontinuing the obligation to pay percentage rent, the 
 
17
uncontradicted evidence was that Friendly's had decided to 
close the store and that Mrs. Beckner was aware of that 
decision.  Mrs. Beckner testified that she understood that, if 
the store closed, she would no longer receive any percentage 
rent.  Thus, the increase in base rent was not grossly 
inadequate in light of the additional income it would produce 
and the uncertainty of the amount or continuation of revenue 
from the percentage rent. 
Mrs. Beckner next argues that the possibility that she 
might own a bank building valued at $800,000 at the end of the 
lease period should not be included as part of the 
consideration because it also was speculative.  Here again the 
uncontradicted evidence was that, if the lease was amended, 
Riggs planned to build such a building.  This potential asset 
was a known part of the business transaction and, in the 
absence of fraud, may be considered as part of the benefit 
Mrs. Beckner received from agreeing to the lease amendment. 
Finally, Mrs. Beckner asserts that the appropriate 
comparison of "value exchanged" is to compare the additional 
$80 per month Mrs. Beckner would receive under the amendment 
with the $800,000 Friendly's would receive for the assignment 
of the lease to Riggs.  This disparity, she maintains, shows 
that the consideration she received was grossly inadequate.  
The amount Friendly's would receive from Riggs to assign the 
 
18
lease is irrelevant to the adequacy of the consideration Mrs. 
Beckner received.  Mrs. Beckner could not recover any amount 
from Riggs because she could not assign the lease to Riggs.  
The lease had, at a minimum, four years remaining, with the 
potential to extend, if the tenant so desired, to fourteen 
years, and contained no provisions for termination by the 
landlord other than for nonpayment of rent or insolvency of 
the tenant.  Therefore, the value of Mrs. Beckner's 
consideration must be measured not simply in the amount of 
increase in base rent but also in light of the rights that she 
possessed regarding the property and her options at the time 
of the amendment. 
Consideration is grossly inadequate when the 
" 'inequality [is] so strong, gross and manifest that it must 
be impossible to state it to a [person] of common sense 
without producing an exclamation at the inequality of it 
. . . .' "  Jackson, 193 Va. at 741, 71 S.E.2d at 185 (quoting 
Gwynne v. Heaton, 1 Bro. Ch. 1, 9, 28 Eng. Rep. 949 (1778)).  
That others could have bargained for a higher base rent or 
secured more favorable terms for the execution of the lease 
amendment does not affect the determination of grossly 
inadequate consideration.  In this case, by executing the 
amendment to the lease, Mrs. Beckner received an annual 
increase of $8,940 in base rent regardless of whether the 
 
19
lease was assigned to another party and whether any business 
was operating on the property.  She also acquired the 
possibility of owning the new bank building at the end of the 
lease.  This record does not support a finding that the 
consideration Mrs. Beckner received was grossly inadequate. 
Mrs. Beckner also asserts the chancellor was justified in 
finding that the transaction occurred under suspicious 
circumstances because Hughes did not further investigate 
whether Mrs. Beckner was represented by counsel following 
Christopherson's March 8 letter and because Hughes drafted a 
letter for Mrs. Beckner's signature stating that Mrs. Beckner 
wanted to deal with Hughes directly.  As noted above, the 
record clearly shows that Mrs. Beckner herself initiated all 
but two of the contacts with Hughes.  Mrs. Beckner's active 
participation in the negotiations regarding the lease 
amendment belies the existence of circumstances that would 
give rise to a level of suspicion sufficient to support the 
presumption of undue influence and rescission of the 
amendment. 
We need not address the chancellor's finding that Mrs. 
Beckner suffered from great weakness of mind because even 
assuming that the finding is supported by the record, weakness 
of mind alone will not entitle Mrs. Beckner to rescission.  
 
20
McGrue, 202 Va. at 426, 117 S.E.2d at 707, Fishburne, 84 Va. 
at 111, 4 S.E. at 582. 
Because the record is insufficient to support the 
chancellor's findings that Mrs. Beckner had a confidential 
relationship with Hughes and that the consideration she 
received was grossly inadequate or the transaction occurred 
under suspicious circumstances, Mrs. Beckner was not entitled 
to a presumption of undue influence.  Therefore, the 
chancellor erred in rendering judgment in favor of Mrs. 
Beckner on Count  IV, Undue Influence. 
Count II − Grossly Inadequate Consideration 
The chancellor also entered judgment in Mrs. Beckner's 
favor on Count II of her Bill of Complaint − grossly inadequate 
consideration.  Substantial failure of consideration is a 
recognized ground for rescission of a contract because such 
gross inadequacy is clear evidence of fraud.  Texas Co. v. 
Northup, 154 Va. 428, 442-45, 153 S.E. 659, 663-64 (1930); 
Broaddus v. Broaddus, 144 Va. 727, 750, 130 S.E. 794, 801 
(1925).  The standard for this claim is the same as claims of 
undue influence based on grossly inadequate consideration:  
"[a]n inequality so strong, gross and manifest that it must be 
impossible to state it to a man of common sense without 
producing an exclamation at the inequality of it."  Texas Co., 
154 Va. at 443, 153 S.E. at 663, (quoting Gwynne, 1 Bro. Ch. 
 
21
at 9).  Finally, because gross inadequacy is based on fraud, 
it must be shown by clear and convincing evidence.  Id. 
We have already determined in considering Mrs. Beckner's 
claim of undue influence that the record did not support a 
finding of grossly inadequate compensation.  Applying the same 
standard to her claims in this Count, we conclude that the 
chancellor erred in entering judgment in favor of Mrs. Beckner 
on Count II because the consideration was not grossly 
inadequate. 
Accordingly, for the reasons stated, we will reverse the 
trial court's decree rescinding the amendment to the lease and 
requiring repayment of funds by Mrs. Beckner.2 
Reversed and final judgment. 
                                                          
 
2 In light of this determination, we need not address the 
remaining assignments of error.