Can disputed facts about agency authority defeat summary judgment in contract cases? Stein Eriksen v. MX Technologies Explained

In Stein Eriksen Lodge v. MX Technologies, the Utah Court of Appeals addressed whether summary judgment was appropriate when genuine disputes existed about an agent’s authority to bind a corporation to substantial contracts.

Background and Facts

MX Technologies’ Events Manager signed contracts exceeding $350,000 with Stein Eriksen Lodge for a corporate conference. The 24-year-old manager had been with the company only a few months and signed the contracts on December 31, 2015, after Stein indicated other groups were interested in the same dates. Under MX policy, contracts over $20,000 required CFO approval, which was never obtained. MX executives later claimed they were unaware of the signed contracts until May 2016 when Stein demanded payment of a past-due deposit.

Key Legal Issues

The case presented three main issues: (1) whether the Events Manager had actual or apparent authority to bind MX, (2) whether MX ratified the contracts through subsequent conduct, and (3) whether the liquidated damages provisions were unconscionable. The district court granted summary judgment to Stein on all issues.

Court’s Analysis and Holding

The Court of Appeals reversed on authority and ratification but affirmed on liquidated damages. Regarding actual authority, the court found disputed facts about whether the Events Manager reasonably believed she had authorization, noting conflicting testimony about approval from the Marketing Director. For apparent authority, while Stein’s expert testified that “Events Manager” titles typically confer signing authority in the hospitality industry, MX’s expert disagreed, creating a factual dispute. On ratification, the court determined that MX’s subsequent actions—including planning activities and promotional emails—were insufficient to establish ratification as a matter of law, as reasonable jurors could conclude these were merely preparatory rather than ratifying conduct.

However, the court affirmed that the liquidated damages provisions were not unconscionable, applying the framework from Commercial Real Estate Investment v. Comcast. The provisions were neither procedurally unconscionable (both parties were sophisticated entities with negotiation opportunities) nor substantively unconscionable (the damages bore a reasonable relationship to potential losses and used industry-standard sixty-day cancellation windows).

Practice Implications

This decision reinforces that agency authority and ratification determinations are typically fact-intensive inquiries unsuitable for summary judgment. Even where expert testimony supports industry customs regarding authority, conflicting expert opinions create genuine disputes of material fact. The decision also confirms that post-Commercial Real Estate, liquidated damages challenges must focus on unconscionability rather than penalty theories, and that industry-standard provisions with reasonable relationships to potential damages will likely survive summary judgment challenges.