Agency by Ratification

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Agency by Ratification

Agency by ratification refers to a legal principle where a person (the principal) approves and accepts the actions or contracts undertaken on their behalf by another person (the agent) who initially lacked the authority to act for the principal. In other words, the principal retroactively ratifies the agent’s actions (after the fact).

For agency by ratification to occur, certain conditions must be met:

Agent’s Action:

The agent must have taken some action on behalf of the principal without proper authority or without an existing agency relationship.

Knowledge of Principal: The principal must have knowledge of all material facts regarding the agent’s actions.

Intent to Ratify: The principal must clearly and voluntarily express the intent to ratify the agent’s actions. This can be done explicitly or implicitly through behavior.

Legal Capacity: The principal must have the legal capacity to authorize the action at the time of ratification.

Examples of Agency by Ratification:

Unauthorized Contracts: Suppose an individual, without proper authorization, signs a contract on behalf of a company. If the company later learns about the contract, reviews its terms, and explicitly approves or accepts it, the company is ratifying the contract.

Real Estate Transactions: An agent may sell a property on behalf of a principal without proper authorization. If the principal, upon discovering the sale, agrees to and accepts the transaction, the agency relationship can be ratified.

Business Negotiations: An employee might enter into negotiations or make a deal on behalf of their employer without explicit authorization. If the employer learns about the deal, reviews the terms, and subsequently approves or accepts the arrangement, it constitutes agency by ratification.

In each of these examples, the key element is the principal’s subsequent approval of actions taken by an agent without prior authorization, turning those actions into legally binding commitments.

There must be some proof that the principal was aware of the act or acts and either accepted the benefits or elected to be bound by the agent’s conduct.

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