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binding settlement agreement, the actual merits of the
settled controversy are without consequence. This
Court has declined to set aside a settlement duly
executed by the parties and filed with the Court in the
absence of fraud or mutual mistake. Stamm Intl. Corp.
v. Commissioner, 90 T.C. 315 (1988); Spector v.
Commissioner, 42 T.C. 110 (1964). However, a court
will not force a settlement on parties where no
settlement was intended. Autera v. Robinson, 419 F.2d
1197 (D.C. Cir. 1969).
A settlement is a contract and, consequently,
general principles of contract law determine whether a
settlement has been reached. Robbins Tire & Rubber Co.
v. Commissioner, 52 T.C. 420, 435-436, supplemented by
53 T.C. 275 (1969). A prerequisite to the formation of
a contract is an objective manifestation of mutual
assent to its essential terms. Heil v. Commissioner,
T.C. Memo. 1994-417; 17A Am. Jur. 2d, Contracts, secs.
27 and 28 (1991); 1 Williston on Contracts, sec. 3:5
(4th ed. 1990). Mutual assent generally requires an
offer and an acceptance. 17A Am. Jur. 2d, Contracts,
sec. 41 (1991). "An offer is the manifestation of
willingness to enter into a bargain, so made as to
justify another person in understanding that his assent
to that bargain is invited and will conclude it."
1 Restatement, Contracts 2d, sec. 24 (1981).
In a tax case, it "is not necessary that the
parties execute a closing agreement under section 7121
in order to settle a case pending before this Court,
but, rather, a settlement agreement may be reached
through offer and acceptance made by letter, or even in
the absence of a writing." Lamborn v. Commissioner,
T.C. Memo. 1994-515. Settlement offers made and
accepted by letters are enforced as binding agreements.
Haiduk v. Commissioner, T.C. Memo. 1990-506; see also
Himmelwright v. Commissioner, T.C. Memo. 1988-114.
Manko v. Commissioner, T.C. Memo. 1995-10.
B. Authority
If a settlement agreement was reached here, it was not
reached by Frank Wheaton negotiating directly on his own behalf
and on behalf of Dorchester. Respondent was represented by
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