Under the principles of agency in legal terms, ratification refers to the approval or confirmation by a principal of an act performed on their behalf by an agent who lacked the authority to do so at the time the act was performed. Ratification effectively retroactively grants the agent the authority to perform the act, making the principal responsible for the agent’s actions as if the agent had been authorized from the outset.
Key Points of Ratification:
- Principal and Agent Relationship:
- Principal: The person or entity on whose behalf an act is performed.
- Agent: The person or entity performing the act on behalf of the principal.
- Lack of Initial Authority:
- Ratification comes into play when the agent acts without prior authority, beyond their authority, or when the existence of the principal was undisclosed at the time of the action.
- Subsequent Approval:
- The principal must have full knowledge of all material facts related to the act when ratifying it.
- The ratification must occur within a reasonable time after the act.
- Effect of Ratification:
- Once the principal ratifies the act, it is treated as if the agent had the authority from the beginning.
- The principal becomes bound by the actions and agreements made by the agent, including any liabilities arising from those actions.
Conditions for Ratification:
- Existence of Principal: The principal must have been in existence at the time the agent performed the act. A non-existent principal (such as a company yet to be formed) cannot ratify an act.
- Intention to Ratify: The principal must show clear intent to ratify the act. This can be done expressly (stating it in words) or implicitly (through actions that suggest acceptance).
- Full Knowledge: The principal must be fully informed about the details of the act they are ratifying.
- Entire Act: Ratification must be of the entire act. The principal cannot ratify only part of the agent’s action; it must be an all-or-nothing decision.
Examples of Ratification:
- Contract Ratification: An agent enters into a contract on behalf of the principal without authority. Upon learning of the contract, the principal approves it, making the contract binding on both the principal and the third party.
- Purchase Ratification: An agent buys property for the principal without explicit permission. If the principal later accepts the purchase and takes ownership of the property, this is considered ratification.
Legal Implications:
- Third Parties: Once an act is ratified, third parties who relied on the agent’s apparent authority are protected, and the principal cannot later deny the agent’s authority for that act.
- Liabilities: The principal assumes responsibility for the act, including any liabilities or obligations that arise from it.
Limitations:
- Illegal Acts: Ratification cannot make an illegal act legal.
- Irrevocability: Once ratified, the principal cannot later withdraw the ratification.
Summary:
Ratification under the principles of agency allows a principal to approve and accept responsibility for an act done on their behalf by an agent who initially lacked authority. This retrospective approval binds the principal to the actions of the agent as if the agent had been authorized from the beginning. The process requires the principal’s full knowledge of the act and a clear intention to ratify it.