Ratification Flashcards
Braymist Ltd. v Wise Finance Company Ltd. [2002]
S.51(1) CA2006, although it says that the agent is “personally liable” on a pre incorproation contract, it doesn’t say whether agent can sue under the contract.
C of A held; yes.
Majority: constructing the statute, it simply follows that if agent can be personally liable, he must also be able to sue.
Lady Justice ARDEN - dissented - not possible on interpreration of s.51 (1) - so must use common law principles - said agent CAN still sue, by applying Kelner v Baxter.
This question is perhaps still open for the UKSC to reconsider if opportunity arose.
Presentaciones Musicales SA v. Secunda [1994]
(In English Civil Procedure law, time limits are a procedural barrier to bringing claim - do not destory claims like in civil law systems - limiting, but not prescriptive).
Here, an English law firm issued a writ against the defendants for breach of copyrighy, on behalf of a Panamanian company.
English firm not authorised to do this.
Company had been acquired and dissolved . But under local law, Board of a dissolved company authorised for a period after the takeover to conduct litigation on behalf of the now dissolved company.
The action, as issued by the solicitors, was within the limitation period in English law for bringing a claim of this kind - Board ratifed the act of firm in issuing the writ.
By the time of ratification however, English law limitation period had expired.
Thus writ would be effective applying rule in Bolton Partners v Lambert, in which case ratification would be effective from the date the writ was issued.
C of A held; Ratification WAS effective here, so allowed copyright action to proceed.
Difficult to reconcile with the idea that can’t use ratification to extend a time limit - as in Dibbins v Dibbins.
ROCH LJ– put it down to the nature of limitation in English system – because expiry of the limitation period just puts a procedural barrier in the way, and doesn;t destroy the right of action, the effect of ratification here was just to remove the barrier – it doesn’t create a new cause of action or extend the time limit.
Kelner v Baxter (1866)
An agent entered into a written contract on behalf of a company not yet incorporated.
Signed it as HIMSELF acting as an ‘agent’ on ‘behalf’ of the company - rather than as the company itself.
Held; he was personally liable on the contract.
(Old case) parol evidence was not admissible to prove he did intend to be bound personally.
Distinguishable from Newborne v Sensolid - mainly down to old parol evidence rules.
Watson v. Davies [1931]
A contract was made EXPLICITLY subject to ratification within a particular time limit.
Held; ratification after the time limit was ineffective, as the time limit had been agreed explicitly.
The Borgvigilant [2003]
Q: was it possible to ratify a contract which contained an exemption clause which barred an action in tort that which the third party was already trying to bring?
Ship owner entering a port was required to sign contract for tug service which excluded the port operator’s liaiblity AND that of the tug owner.
Damage - ship owner sued tug owner.
Held; port operator had implied authority to sign contract on behalf of tug owner.
BUT - obiter:
Had there been no implied authority, a letter sent by tug owner AFTER the incident constituted ratification, even though the ship owner’s action in tort would have already accrued; tug owner would’ve been able to rely on exemption clause.
Despite only ratifying the agent’s contract after the incident had occurred.
Obtier, said Presentaciones Musicales v Secunda was approved.
Newborne v Sensolid (Great Britain) Ltd. [1953]
Company - pre-incorproation contract - he signed on behalf of the company name Ltd - but not yet incorporated.
Held; he could not sue on this contract since he did not make it as an agent or as a principal – as the principal purported to be the company.
Conversely, he could not be sued on it either - whole transaction was ineffective.
One authority for the requirement that for ratification to be effective, the principal must be IN EXISTENCE at the time of the transaction.
Principal cannot ratify transaction if not in existence at the time of the transaction.
Distinguishable from Kelner v Baxter.
Boston Deep Sea Fishing and Ice Co. v. Farnham [1957]
Illustration that principal must have CAPACITY to enter into the contract, both at the time of the transaction itself AND at the date of ratification.
I.E. principal must himself have been LEGALLY CAPABLE of doing the act.
Often about mentally incapacitated people or minors - this case not about that though.
Here, tax case - British people acted as agents for French owners of fishing vessels - during WW2 continued relationship but couldn’t communicate with French owners.
Q: did they have to pay tax on the profits?
Relevant tax statute said yes IF they were carrying on a “regular agency”.
But, HELD; not carrying a “regular agency”.
French owners, although they had impliedly ratified the activities of the English agents, were “enemy aliens” during the war for the purposes of private law matters - thus they lacked capacity to ratify the English agents’ activities.
Dibbins v. Dibbins [1896]
Under a partnership agreement, on the death of either partner, the survivor had the right to purchase the share of the deceased partner, provided notice to the deceased partner’s executors within 3 months of his death’ – a type of pre-emption right.
One partner died - agent acting on behalf of surviving partner gave notice within 3 months - but this notice was ineffective as at the time, surviving partner was insane - so lacked capactiy to appoint agent etc.
Later, authority to exercise the pre-emption right was granted by the Court of Lunacy - but now the 3 month time limit had expired.
Held, the second notice, whilst (in theory) effective, was too late, and therefore did not ratify the agent’s actions.
Authority for the proposition that you can’t use ratification as a way to extend your time limit for doing something.
Can’t have an ineffective exercise of some power within a time limit, and then ratify it properly later after the time limit.
Example of Bowstead & Reynold’s first exception Bolton Partners v Lambert.
“Where it is essential to the validity of an act that it should be done within a certain time, the act cannot be ratified after the expiration of that time, to the prejudice of any third party”.
Mental Capacity Act 2005, s.2
Defines people who ‘lack capacity’ (without which, ratification cannot be effective).
(1) …a person lacks capacity in relation to a matter if at the material time he is unable to make a decision for himself in relation to the matter because of an impairment of, or a disturbance in the functioning of, the mind or brain.
(2) It does not matter whether the impairment or disturbance is permanent or temporary.
(3 )A lack of capacity cannot be established merely by reference to—
(a) a person’s age or appearance, or
(b) a condition of his, or an aspect of his behaviour, which might lead others to make unjustified assumptions about his capacity.
(4)In proceedings under this Act or any other enactment, any question whether a person lacks capacity within the meaning of this Act must be decided on the BALANCE OF PROBABILITIES.
Bedford Insurance Co. Ltd. v. Instituto Resseguros do Brasil [1985]
Q: could a principal effectively ratify an unauthorised contract after the time that the period of cover provided for by the insurance policy had already started?
JUSTICE PARKER - held; Ratification WAS possible in this scenario.
(Although, the particular ratification on this case was ineffective for other reasons to do with interpretation of the insurance legislation (therefore this is obiter dicta))
But seems to qualify Metropolitan Asylum case - this is now the preferred view:
Whilst the TIME FOR PERFORMANCE of the contract is certaintly an important factor to take into account when considering whether a ratification has been within a reasonable time, is it not decisive.
A matter of evidence as to ‘reasonable time’
Trident General Insurance Co. v. McNiece Bros. Pty. Ltd. (1987)
Australian case illustrating special rule for insurance contracts.
In marine insurance contracts it’s well settled that ratification can take place AFTER there has been a loss.
If, for example, an agent acting on behalf of a ship owner enters into an unauthorised insurance contract over the ship, and the ship is lost or damaged, the shipowner can nonetheless ratify the contract amd benefit.
OPM Property Services Ltd v Venner [2004]
Another case on PROOF OF RATIFICATION.
A vendor refused to execute a sale of his house on the ground that his agent had acted without authority and that the contract was therefore unenforceable.
However, held; that the defendant had, on the evidence, clearly and unequivocally ratified the exchange of contracts.
For example, after the property had remained unsold for a long period, on hearing the news that his estate agent had sold it at last, the vendor went round to the agent’s office with a bottle of champagne.
Bowstead & Reynolds: What constitutes PROOF OF RATIFICATION?
BAR SET VERY LOW!
(1) May be express or by conduct.
(2) will be express if: a clear manifestation by one … that he treats the act as authorised and becomes a party to the transaction in question. It NEED NOT be communicated to the third party OR the agent (so once principal has manifested intention to ratify, ratification is proven even though agent/3rd party don’t know of it)
(3) will be implied wherever the CONDUCT of the person… as to amount to clear evidence that he adopts or recognises such an act or transaction; and may be implied from the mere acquiescence or inactivity of the principal.
(4) The adoption of part of a transaction operates as a ratification of the whole.
(5) It is not necessary that the ratification of a written contract should be in writing, but the execution of a deed can only be ratified in writing.
Bird v. Brown (1850)
Cite alongside Donelly v Popham - rule that ratification operates retrospectively won’t be used to alter already-vested proprerty rights
In sales of goods law, seller has remedy of Stoppage in Transitu - if buyer yet to pay goes insolvent, can get goods back from carrier before delivery.
Here, agent acting on behalf of seller served notice of stoppage because buyer had become insolvent - but agent was not authorised to serve this notice.
Second and third notice also unauthorised.
Finally, the principal (the seller) ratified the third notice of stoppage.
Q: was this third notice effective?
By this time, goods had reached insolvent buyer - so trade creditors of buyer wanted to claim against them, so arguing that they hadn’t revested in seller.
Held; ratification was ineffective, because the ownership of the goods had already vested with the buyer (the buyer’s trustee in bankruptcy).
The rule that ratification operates retrospecitlvey could not be used to divest the buyer’s trustee in bankruptcy from their right in the property.
Forman & Co. Pty. Ltd. v. The Liddesdale [1900]
Agent acting on behalf of shipowners had authorised some repairs to the ship, although not authorised to do so.
Owners took delivery of the ship when the repairs were completed.
Q: did their taking delivery of the ship constitute a ratification of the agent’s act in entering into a contract for the repairs.
JCPC held; no – because the owners had no choice but to take the ship back, and therefore there act of doing so wasn’t to be treated as ratification of the agent’s act.
NOT SUFFICIENT PROOF OF RATIFICATION - EVEN AN IMPLIED ONE.
Peculiar case because as repairers, the repairers would’ve had a lien over a ship.
