Ratification

Question 1

What is ratification?

Answer 1

When an agent purports to act on behalf of a “principal” without any authority at all, but the principal subsequently validates the act and becomes bound.

Question 2

What is the legal effect of ratification?

Answer 2

give transaction retroactive effect

-unless the principal lacked contractual capacity at the time the agent entered into the unauthorized transaction (in which case, the P is deemed to have adopted the K)

or

-unless retroactivity would intefere with intervening third party rights

Question 3

Upon ratification, an agent is

Answer 3

relieved of liability for breach duty to his principal and of his implied warranty of authority

Question 4

What are the requirements for ratification?

Answer 4

1. principal must know (or have reason to know) all material facts
2. accept the entire transaction
3. have capacity

Question 5

What are the methods of ratification?

Answer 5

(express or implied through actions of the P)

1. acceptance of the transaction’s benefits
2. silence if there is a duty to disaffirm
3. suing on the transaction

Question 6

What can be ratified by the principal?

Answer 6

Generally a principal may ratify anything unless:

(i) performance was illegal at the time of ratification
(ii) third party has withdrawn
(iii) there has been a material change in circumstances