New England Educational Training Service, Inc. v. Silver Street Partnership
Supreme Court of Vermont
528 A.2d 1117 (1987)
Silver Street Partnership (defendant) bought real property unaware it was encumbered by a mortgage held by New England Educational Training Service, Inc. (NEET) (plaintiff). Silver Street hired attorney Evans and gave him general authority to resolve the mortgage issue, including authority to make a $10,000 settlement offer, which NEET rejected. Evans was not given further specific settlement authority, but later purported to settle with NEET for $60,000. Silver Street refused to honor the $60,000 settlement, and NEET filed a foreclosure action and moved for summary judgment, which the trial court granted on the theory that the attorneys had authority to settle.
Whether an attorney can bind a client to a settlement agreement without express authority to settle, when the client has not acted in a way that would lead a third party to reasonably believe the attorney had such authority.