Lemley v. Lemley

Oregon Court of Appeals · Family Law

Family LawSettlement AgreementsAgencySpecific PerformanceStatute of Fraudsratificationagencyunauthorized agent

Facts

After the dissolution appeal, the parties negotiated a settlement through counsel under which plaintiff would satisfy a contempt judgment, release lis pendens notices, forgo further appellate review, and pay defendant $168,000; defendant would forgo seeking appellate attorney fees and convey certain real property to plaintiff. Plaintiff performed by delivering the satisfaction and releases, allowing his appellate rights to expire, and raising and paying the settlement funds, while defendant used the releases to complete sales of property and refrained from seeking attorney fees. Defendant later refused to sign the deed, asserting her attorney lacked authority to bind her. The record showed she had received or seen the agreement, directed how plaintiff should send the releases, consulted another lawyer about the agreement and her attorney's authority, and did not clearly repudiate before accepting the benefits of plaintiff's performance.

Issue

Whether defendant was bound by the settlement agreement even if her attorney lacked authority to enter it, because she later ratified the agreement by accepting the benefits of plaintiff's performance with knowledge of the material facts. If so, whether the agreement was nonetheless unenforceable under the statute of frauds because the agent lacked written authority to contract for transfer of real property.

Rule

A principal ratifies an unauthorized contract when, with knowledge of the material facts concerning the existence and extent of the obligations created by the transaction, the principal manifests assent to be bound or engages in conduct indicative of consent, including knowingly accepting the benefits of the transaction. Ratification may be inferred from failure to repudiate or disavow where a reasonable person would be expected to speak. Even if an agreement involving transfer of real property would otherwise be unenforceable because the agent lacked written authority, it may be enforced through part performance if the agreement is clear and unambiguous, the conduct is clearly and unequivocally referable to the agreement, and equitable grounds support enforcement.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

After a divorce appeal in Portland, Elena Cruz's lawyer, without written authority, signs a settlement requiring Marcus Doyle to release recorded claims against two parcels, dismiss a contempt judgment, and pay cash in exchange for Elena's deed to a duplex. Elena receives the settlement letter the same day, tells her lawyer to have the release documents sent directly to the escrow company so her pending sales can close, and then closes both sales at a profit before refusing to sign the deed.

Is Elena most likely bound by the settlement?

Explanation. A principal ratifies an unauthorized contract when, with knowledge of the material facts concerning the obligations created by the transaction, the principal manifests assent or engages in conduct indicative of consent, including knowingly accepting benefits. Elena knew of the agreement, directed how Marcus should perform a key term, and accepted the resulting benefits by completing profitable sales. That conduct supports ratification even if her lawyer initially lacked authority. (Derived from Lemley v. Lemley (n.d.).)