Meaning of Ratification

CASE STUDY 2

MEANING OF RATIFICATION:

Ratification means “confirmation” or “approval” of an agent’s act that has not been authorised by the principal.

It can arise in any of these two situations. First is where a person who has no authority to act for Principal, has acted as if he had the authority. In this situation, he is never appointed an agent and there is no pre-existing agency relationship. Second situation is where a duly-appointed agent has exceeded his authority. In this situation, the parties have a pre-existing agency relationship.

Under section149 also state that, where acts are done by one on person on behalf of another but without his knowledge or authority, he may elect to ratify or disown the acts. This means the principal can elect either to ratify for example accept and confirm the contract. This can be done expressly or impliedly by conduct. Or the principal also can disown the agent’s acts.

Under section 150, ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done.

Example of first illustration is A, without authority, buys good for B. Afterwards B sells them to C on his own account; B’s conduct implies a ratification for the purchase made for him by A.

Second illustration is A, without B’s authority, lends B’s money to C. Afterwards B accepts interest on the money from C. B’s conduct implies a ratification of the loan.

EFFECT OF RATIFICATION

Under section 149 state that the effect of ratification is that the contract becomes binding on the principal, as if it has been performed by his authority.

The contract must takes effect retrospectively. For example, contract by A is on 1 January. If P ratifies on March, it takes affect from 1 January.

In addition, in case like Bolton & Partners Ltd v Lambert (1889) ChD 295, state that an agent accepted an offer from the third party, but he had not been authorised by the principal to do so. Later, the third party tried to revoke his offer. The principal then ratified the agent’s acceptance. It was held that the third party’s purported revocation was too late, since acceptance took effect before the revocation.

In addition, if there is no ratification, the agent shall be personally liable on the contract unless the third party agrees to release him. The third party may also sue him for breach of warranty of authority.

CONDITIONS FOR RATIFICATION

Before ratification can be done, one of the following conditions must exist. First of all, an agent who was duly appointed exceeded his authority and the second one is a person who have no authority to act for the principal has acted as if as he has the authority.