RATIFICATION

Ratification is affirmance by the principal of an agents unauthorized act(s). It is an offer by the third party to the principal. If the offer is never accepted the agent may be liable to the third party for a breach of warranty of authority. The third party may rescind the offer to ratify at any time prior to an acceptance by the principal. If accepted the principal is liable for the agents acts and the agent is no longer liable to the principal for the unauthorized act(s).

Ratification relates back to the original unauthorized acts of the agent. It is not effective if it benefits a person who engaged in conduct that makes a contract voidable such as misrepresentation if the principal ratified to avoid a loss and a benefit in favor of the agent, or it would prejudice an innocent third party.

If the actor is not an agent and does not claim to be one, ratification and agency law does not apply. Ratification can create an agency relationship if none existed before the ratification if the person acting purported to act for the principal.

Only a disclosed or partially disclosed principal can ratify. If the principal is disclosed only the purported principal can ratify. The minority view is that an unauthorized agent can affirm the contract and enforce it against a third party. If the principal is partially disclosed only the person whom the agent intended to be the principal can ratify.

Delegable act: Only acts that can be performed by an agent can be ratified. If the act is illegal and the illegality makes it void, it cannot be ratified.

Knowledge: The principal must have actual knowledge of all materials facts when she ratifies. There cannot be an acceptance unless all the terms of the offer are known.

Capacity: The principal must exist when the act occurred and have capacity to ratify. If the incapacity makes the contract voidable, the principal may ratify once the incapacity is removed.

The ratification can be either express or implied. The words or conduct by the principal must manifest and intent to be bound. No formalities are required. An express ratification occurs when the principal notifies everyone involved. An implied ratification occurs from the principal retaining the benefits of the transaction. But if the benefits have been consumed or assimilated to the principals property a ratification will not be implied. Estoppel will apply if the principal fails to repudiate the act.

The principal must accept the entire transaction to make the ratification effective.

Copyright Abn Study Partner 202

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