Agency By Ratification | Essential of Valid Ratification | Business Law
Agency by ratification definition
Ratification means the subsequent adoption and acceptance of an act origin done by a person without instruction or authority of the other. So when a person adopts or accepts the acts of another who acted as his/her agent without his/her knowledge and authority, the contract of agency is said to be created by ratification.
Thus agency by ratification refers to such an agency where the principal ratifies the contract made by the agent on his behalf but without his authority.
Agency by ratification example
For example, John buys a television from Hari on behalf of Shyam. However, Shyam had not appointed John as his agent nor instructed. But when Shyam heard John bought a television on his behalf, he accepts it. Here Shyam ratified the act; John becomes an agent of Shyam by the agency by ratification.
Essentials of Valid Ratification
There are certain conditions that are to be fulfilled to making ratification valid. They are
The principal must be in existence at the time of the contract is made.
If the principal comes into existence only after the performance of activities by the so-called agent such ratification will be valid in the eye of law. For example, if a person acting as an agent of the company that was not legally established at that time but after the company establish legally if the company ratify the works then it is not valid.
The agent must have given the identification of the principal to the third person.
If the ratification is made by a person other than the true principal that can’t be valid ratification. Hence it is necessary that while dealing with the third person, the so-called agent must have given the full identification of the principal.
The principal must be competent and must not be disqualified in the eye of law.
For example, a minor may be incompetent for the contract.
Only awful acts can be ratified and illegal acts are not ratified.
For example, the person who acted for the smuggling business is not ratified even principal agrees to ratify it.
The principal must have the knowledge of all material facts at the acts done by the parties.
If without getting knowledge of the material facts the ratifies can’t be valid.
Ratification must be made within a reasonable or fixed time if mentioned in the contract.
If there mentioned a fixed time to perform the acts then ratification must be made within that specified time if not mentioned then ratification made within a reasonable time.
Ratification must be unconditional and accepts the work without any condition.
It means the principal can’t put any terms and conditions while ratifying the works of a so-called agent.
Ratification must be communicated and complete information must convey to the ratifier otherwise it can’t be valid.
Ratification must not be injured to a third person.
Ratification can’t be effective where its effect is to subject a third person to damages or terminate any right or interest of a third person. For example, John holds the property on a lease basis from Crayon’s three-month notice. Max an unauthorized person gives notice of termination to John. The notice can’t be ratified by Hari.