It's The Law: Attorney might bind client

Question: I have been working on a contract. We made some changes and the attorney for the other side signed the changes. I asked for his client to sign, but he told me his signature was good enough. A few days later, his client called me to tell me that he did not agree to the changes and we did not have a deal. Do I have a contract or not?

Answer: Authority of an attorney and ability to bind a client depends on the circumstances of each case. In litigation, attorneys generally have implied authority to control procedural aspects of court action. That is acknowledged in Florida’s Rules of Judicial Administration, which require every pleading and other paper of a party represented by an attorney be signed by at least one attorney of record when it is filed with the Court. The authority of an attorney in a lawsuit extends to agreement on facts, admissibility of evidence and procedural matters. But, if the lawyer is going to admit something that might be detrimental to his client, the admission must be when the client is present and without objection of the client.

An attorney does not have power to unilaterally deal with the merits of a case. The client must consent to dismissal of a lawsuit. The client must also consent to stipulation for entry of a final judgment. Perhaps most importantly, an attorney has no authority to settle a client’s case without the client’s consent. That is also true in mediation, where the client must agree to settlement and the attorney cannot bind the client absent agreement.

A good example of an attorney lacking authority to bind a client in a contract matter is the case of Rushing v. Garrett. The Rushing case involved a lawsuit to partition or divide real property. In the correspondence between the parties’ attorneys, one attorney indicated his clients would buy or sell the property at a stated price. The trial judge ruled that created a binding contract, as the attorney bound the client. The appellate court reversed stating that hiring an attorney to negotiate a settlement, without any other action on part of the client did not create apparent authority or actual authority to execute a contract imposing liabilities and burdens on the client.

The Rushing case does explain that in some cases, an attorney may have apparent authority, if not actual authority, that will bind the client. Those cases require the client taking action which would lead another party to believe in good faith that the client consents to the acts of the attorney or has given the attorney authority to bind the client in that particular matter.

The case of Franklin Pond, Inc. v. Ricci is even clearer. In the Ricci case, an attorney signed a real estate sale contract on behalf of the buyer. The contract was signed by Mr. & Mrs. Ricci as sellers. Later, the contract was amended and the attorney again signed for

the buyer. The deal fell through and the buyer sued for specific performance, seeking judgment forcing the seller to perform under the contract. The court ruled there was insufficient evidence to establish the attorney had authority to execute the purchase contract on behalf of the buyer. The court explained that an attorney has no implied authority to execute a contract for sale or purchase of real property and must have express authorization. It said authorization was lacking and there was no contract.

Under certain circumstances, attorneys do have authority to bind their client’s contractually. In the case of Federal Property Management v. Richmond Health Care, the seller’s attorney extended a contract termination date and continued negotiations with a buyer. Evidence established the seller’s president knew the attorney was negotiating, that the termination date had been extended by the attorney and that the buyer was treating the contract as still in effect. The seller’s president did not notify the buyer or direct the seller’s attorney to notify the buyer’s attorney that the contract was no longer effective. The seller’s claim that the contract was not extended and that it terminated on the original termination date was rejected by the court.

The facts and circumstances of these cases will affect the outcome. If the client has given the attorney express authority to take action, the client will be bound. In some cases, giving the attorney apparent authority to bind the client will be enough. To play it safe, anyone involved in contract negotiations should be sure that all parties sign the contract and any amendment changing or modifying terms after the contract is signed.

William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.

Questions for this column can be sent to: William G. Morris, e-mail: wgmorrislaw@embarqmail.com or by fax, (239) 642-0722.

Other articles of interest can be viewed at our website, www.wgmorrislaw.com.

© 2013 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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