Implied Authority. Juanita Miller filed a complaint in an Indiana ...

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Implied Authority. Juanita Miller filed a complaint in an Indiana state court against Red Arrow Ventures, Ltd., Thomas Hayes, and Claudia Langman, alleging that they breached their promise to make payments on a promissory note issued to Miller. The defendants denied this allegation and asserted a counterclaim against Miller. After a trial was held, the judge announced that, although he would be ruling against the defendants, he had not yet determined what amount of damages would be awarded to Miller. Over the next three days, the parties' attorneys talked and agreed that the defendants would pay Miller 21,000. The attorneys exchanged correspondence acknowledging the settlement. When the defendants balked at paying this amount, the trial judge issued an order to enforce the settlement agreement. The defendants appealed to a state intermediate appellate court, arguing that they had not consented to the settlement agreement. What is the rule regarding the authority of an agentin this case, the defendants' attorneyto agree to a settlement? How should the court apply the rule in this case? Why?

Question 2

Agency relationships must be evidenced by a written contract.
 a. True
  b. False
  Indicate whether the statement is true or false

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Answer to Question 1

Implied authority
A settlement agreement is most likely enforceable when a client authorizes his or her attorney to negotiate a final deal, even if the client does not literally consent to all the final negotiated terms. For example, if a client instructs his or her attorney to settle a case within certain parameters, and the attorney settles the case according to those instructions, the agreement would not be unenforceable merely because the client had not consented to the final negotiated terms. The attorney-client relationship alone, however, without some additional indication of client authorization, is not enough to create a binding settlement agreement. Thus, in Gravens v. Auto-Owners Insurance Co., 666 N.E.2d 964 (Ind.App. 1996), an Indiana state intermediate appellate court held that a settlement agreement into which an attorney entered could not be enforced against a client who had not consented to be bound by it. In that case, the client had not given the attorney the authority to settle the claim. In Red Arrow (this case), a different panel of the same court stated that an attorney has apparent authority to dismiss a case, to allow judgment against the client, and to do all things ordinarily done with respect to the litigation for which the attorney was hired, including settling a claim without the client's consent. The court held that when an attorney enters into a settlement agreement without his client's consent, the agreement is enforceable against the non consenting client. Citing the correspondence between the attorneys, the court affirmed the lower court's judgment.

Answer to Question 2

FALSE