Short notes on the Modes of Ratification

Ratification may be express or implied:

Ratification may be express or may be implied in the conduct of the person on whose behalf the acts are done (Sec. 197).

Example:

A without B’s authority buys goods for him (B). Afterwards, B sells those goods to C. B’s conduct implies a ratification of the purchases made for him by A.

Requisites of a Valid Ratification:

A ratification in order to be valid must satisfy the following conditions:

1. The act must have been done on behalf of the named or identifiable principal and not in the name of the agent: If the act is done in the name of the agent, the principal cannot ratify the act.

Example:

An agent was authorized to buy wheat at a certain price. Since the price was higher, the agent purchased the wheat at a higher price in his own name rather than in the name of his principal. Subsequently, the principal ratified the contract but refused to take delivery of the wheat. The supplier sued the agent. The agent in turn sued the principal. Held, the principal could not ratify as the agent did not act on behalf of the principal [Keighley v. Durant],

2. The principal must be in existence at the time of contract: If the principal was not in existence at the time of contract, it cannot be ratified.

Example:

A entered into a contract with B on behalf of a company yet to be formed. The company on being formed ratified the contract. Subsequently, the company went into liquidation, B sued A. Held, the company could not ratify the contract as it was not in existence at the time the contract was made. A was held personally liable [Kelner v. Baxter].

3. The principal must be competent to contract at the time the contract was entered:

Not only the principal must be in existence but also he must be competent to enter into contract at the time the contract was made. Thus a minor on attaining majority, cannot ratify a contract entered into on his behalf during his minority.

4. A person ratifying the contract must have full knowledge of the act to be ratified:

No valid ratification can be made by a person whose knowledge of the facts of the case is metrically defective (Sec. 198).

5. The contract can be ratified as a whole:

A person cannot be choosy. He cannot ratify a part and at the same time, reject the other. A person ratifying any authorized act done on his behalf, ratifies the whole of the transaction of which such act formed a part. He cannot accept the profitable part and reject the unprofitable one (Sec. 199).

6. Ratification can be done of lawful contract or even of voidable ones. However, no ratification of void or unlawful acts can be done.

7. Act to be ratified must be within the powers of the principal or the person ratifying. Thus a company cannot ratify an act which is ultra vires the powers of the company.

8. Ratification must be done within a reasonable time otherwise it will not be valid.

9. Ratification to be valid must be communicated – Hence if the ratification is not communicated, it will not be valid.

10. Ratification should not cause damages to a third party- An act done by one person on behalf of another, without authority, which, if done with authority, would have the effect of subjecting a third person to damages, or of terminating any right or interest of a third person, cannot be ratified (Sec. 200).

Example:

A holds a lease from B, terminable on three months notice. C, an unauthorized person, gives notice of termination to A. The notice cannot be ratified by B, so as to be binding on A, as this will have the effect of terminating B’s contract with A.