Authority of Agent. The Federal Land Bank (FLB) filed an action to foreclose a mortgage on Tom and Judith Sullivan's real estate. Before the trial, FLB's attorney wrote to the Sullivans' attorney, inviting settlement offers. A copy of the letter was

Question

sent to Wayne Williamson, an FLB vice-president. Nine days later, on September 3, the Sullivans' attorney wrote to FLB's attorney expressing interest in settling the case. A copy of this letter was sent to Williamson. On September 11, FLB's attorney replied with an offer that "

Answer 1

Authority of agent
The court concluded that FLB's attorney had actual authority to settle the case and that the settlement agreement was thus binding. "It is well settled that actual authority can be created by the acquiescence of the principal in the actions of the agent." The court noted that under state law "‘[a]ctual authority is such as a principal intentionally confers upon the agent, or intentionally or by want of ordinary care, allows the agent to believe himself to possess.' Here, FLB acquiesced in its attorney's actions, allowing the attorney to believe he possessed actual authority to settle the case." The court emphasized that FLB, through its vice-president, received copies of all correspondence but "made no attempt to stop the negotiations or inform its attorney of limitations to his authority." When the attorney "made a concrete offer of settlement, indicating that his client was in complete agreement," FLB "failed to disavow the offer. The letter containing the settlement offer clearly shows the attorney's belief that he pos-sessed authority to settle the case, and FLB's failure to act upon receipt of the letter constitutes acquiescence in the offer."