In Delaware Dept. of Educ. v. Doe, (Del. Ch., Nov. 21, 2008), read opinion here, the Chancery Court was presented with the issue of whether a purported settlement agreement was binding in light of an issue about whether the negotiating attorneys had the authority of their clients to bind them to the terms of the alleged settlement agreement. Utimately, the court reasoned that the attorneys did not bind their clients to the terms of the agreement.

Based on Rule 56(h), the court treated the cross-motions for summary judgment as stipulations to rule on the record. Thus, the decision was made without oral argument and based on the relevant emails and related documentation that led up to what at least one party thought was a settlement.

Several months ago, in Dweck v. Nassar, summarized here,  the Chancery Court was called upon to address a similar issue, but in this letter decision, the facts of that prior case were specifically distinguished.

Here is the money quote from the court’s letter opinion in this matter:

The issue before me is whether the settlement discussions between the two attorneys resulted in a binding settlement agreement. The evidence on which my decision must be based is derived from the email correspondence between or originating from Taschner and Cooke as well as their respective affidavits.

Whether a settlement agreement was reached depends on the objective, overt manifestations of the parties, rather than their subjective intent.1 The overt manifestations of agreement must be viewed from the perspective of a “reasonable negotiator” who must conclude that the agreement contained all terms essential to the parties and that the agreement concluded the negotiations.2

If an agent is performing the negotiations, the agent must possess authority to act in the stead of the client in order for any negotiations between agents to be binding.3 Although “an attorney of record in a pending action who agrees to the settlement of [a] case is presumed to have lawful authority to make such an agreement,”4 it is well understood that “questions of agency are not subject to absolute rules but, rather, turn on the facts of the individual case.”5 An agent’s authority must either be express, implied, or apparent. Express authority must be evident from an oral or written agreement. Implied authority is derived from actual authority and allows the agent to act “based on the agent’s reasonable interpretation of the principal’s manifestation in light of the principal’s objectives and other facts known to the agent.”6 Apparent authority can be demonstrated when the principal “knowingly permits the agent to assume”7 authority to act on its behalf so “as to preclude a denial of its existence.”8

After reviewing the briefs and evidence submitted, I conclude that neither Taschner nor Doe overtly manifested intent to agree to the settlement. I also conclude that Taschner did not possess express, implied, or apparent authority to unilaterally commit Doe to an alleged agreement.