AGENCY BY RATIFICATION BY DEVANSHI SAXENA@LEXCLIQ

AGENCY BY RATIFICATION

According to Section 197 of the Indian Contract Act, 1872, agency by ratification comes into play when a person has done an act on the behalf of another without his knowledge or consent. It can be expressed or implied in the conduct of the person on whose behalf the acts are done.

The doctrine of ratification gives the person, on whose behalf the act is done, a option either to adopt the act by ratification or to disown it. ratification does a kind of affirmation of unauthorized act. The Latin maxim โ€œomnis ratihabitio retrorahitur et mandato priori aequiparaturโ€ means that every ratification is dragged back and treated as equal to a command or previous authority.

Requirements of ratification-

  1. Act on the behalf of another person

It is necessary that act in question must have been done on the behalf of the person who wants to ratify it. If the agent acts in his own name, his act cannot be ratified by any other person even if the agent in his secret mind intended to act for another.

  1. Competency or existence of principal

Since ratification relates back to the date when the contract was originally made by the agent, it is necessary that the principal who purports to ratify must be in existence at the time of the contract and should also be competent.

  1. Knowledge of the relevant facts

There must be full and requisite knowledge of facts for valid ratification on the part of principal.

  1. Ratification of Whole transaction

The principal who purports to ratify must approve the whole transaction made by agent and not just the part which is beneficial for him.

  1. As per section 200 of Indian Contract Act, any act done by a person in behalf of another person without any authority, knowledge or consent, and 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, by ratification, be made to have such effect.
  2. Within reasonable time

Watson v. Davies (1931)

Defendant offered to sell his property to a charitable institution, the offer was accepted by few members of the board subject to approval by full members of the board. The day on which the board was to meet, the defendant withdrew his offer, the board ratified it and brought an action for the specific performance. The ratification was held to be too late and the revocation was effective.

 

  1. Acts within principalโ€™s power

Bolden Partners v. Lambert (1889)

Defendant made an offer to the managing director of the company who having no authority to do so, accepted it that gave the company an option to ratify the contract but the company ratified only after the defendant had withdrawn his offer. The company sued the defendant for specific performance and the company was held entitled to it.

 

Effects of ratification

  1. As if the principal himself has given the authority to an agent to perform an act.
  2. It establishes the relationship of principal and agent in so far as the act ratified is concerned between the person ratifying it and doing it.
  3. Ratification establishes the relationship of contract between principal and third party.

 

Doctrine of relation back

Ratification relates back to the date on which the agent first contracted. Section 196 says if the unauthorized act is ratified, it will have the same effect as if the principal himself has authorized it.

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