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Ratification of Agency- Contract Act

Ratification

Mr A is the father of B. B went to C and borrowed RS. 1000/ saying that his father asked him to borrow from C. Later Mr. A Learned about this transaction and told MS. C that he will pay the Money. Here initially Mr. A have not authorised Mr -B to borrow from Mr. C but later he ratified the action and taken the responsibility to repay .

When does Agency by Ratification arise?

1. when a person without being authorised act as agent. 2. when duly authorised agent act beyond authority .

In above circumstances a principal can choose to ratify the acts of his agents, if it is done on his behalf.

The effect of ratification is that it makes the ratifier (i.e., the principal) bound to the contract, as if, he had expressly authorized the person to transact  on his behalf .  This  is also known as ex post facto agency, i.e., agency arising after the event.

Rules governing agency by ratification

Even the Law gives the power to principal to ratify the excesses of an agent and that take responsibility, there are rules and circumstances on which it will be recognised otherwise not.

The following are the rules governing the agency by ratification.

1. An act will be regarded as a ratification only if the principal had a free choice whether to do it or not.

2. The agent must act as an agent. A principal can only ratify acts, which the agent can do on his behalf. It mean if the agent do an act of his own the principal Cannot ratify.

3. The principal must be competent to contract not only at the time when the agent exceeded his authority, but also when he ratified such act-of the agent.

4. Ratification may be express or it may be implied in the conduct of the person on whose behalf the acts are done. For instance, without A’s authority, his brother B, lent his house to C. Later on C pays the rent for the house and A accepts the same. By this conduct B shall be deemed to have ratified the act of A.

5. The principal must be existing when the cut is done. Hence, a company cannot ratify per-incorporation agreements.

6. The principal at the time of ratification must have the full knowledge of the material facts.

7. The principal must ratify the whole of the transaction.

8. The act must be ratified in time. A contract cannot be ratified after the time fixed for its performance. If no such time is fixed, it must be ratified within a reasonable period of time, from the principal’s acquiring notice of the unauthorized act.

9. Ratification cannot be made when it affects the rights and interest of a third party.

10. The ratification should relate back to the actual date of the formation of the contract between the agent and the third party. In other words, it should have retrospective effect and not prospective. For example, if A without being authorized thereto lends B’s money to C and afterwards B ratifies the transaction. The contract will be deemed to have been ratified by B on the date on which A lent B’s money to C.

11. Although ratification is not confined to lawful acts, an act, which is simply void in law, cannot be validated by ratification. In other words, only lawful acts can be ratified.

Conclusion

The effect of ratification is to put the principal, agent, and the third party into the position that they would have been if the agent’s acts had been authorized from the beginning. Ratification, in fact, relates back to the time of the unauthorized act, and not to the date when the principal ratified the said act. The doctrine of relating back is based on the assumption that the unauthorized act is not a nullity; if it were, ratification itself would be ineffective either because a nullity cannot be ratified or, the principal himself could not have validly done the act in question, when it took place.

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