Ratification in Agency Law

Ratification in agency law refers to the authority that a principal has to retroactively approve actions taken by an agent on their behalf, even if the agent did not have actual or apparent authority to take those actions at the time they were taken.

Ratification occurs when a principal, after becoming aware of an agent's unauthorised actions, chooses to approve those actions and assume liability for them. In order for ratification to occur, the following three elements must be present:
  1. The agent must have acted on behalf of the principal without actual or apparent authority;
  2. The principal must have had knowledge of the agent's actions, and knowledge of the material facts surrounding those actions; and
  3. The principal must have accepted the benefits of the agent's actions or otherwise ratified the actions.

Ratification can occur in a number of ways, such as through express ratification (where the principal expressly approves the agent's actions), or implied ratification (where the principal's conduct implies that they have ratified the agent's actions, such as by accepting the benefits of those actions).

It is important to note that ratification only applies to actions that the agent had the capacity to enter into on behalf of the principal. If the agent lacked the legal capacity to enter into a contract or perform a certain action, then the principal cannot ratify those actions. Additionally, if the third party with whom the agent dealt has withdrawn their offer or the offer has lapsed, the principal cannot ratify the agent's actions.

Ratification has important legal consequences for both the principal and the agent. Once the principal ratifies an agent's actions, they become liable for the agent's actions as if they had authorised the actions in the first place. In addition, the agent is released from liability for those actions, and the third party with whom the agent dealt is now able to hold the principal liable for any harm or damages resulting from the agent's actions.

Ratification authority is an important concept in agency law, as it allows principals to retroactively approve actions taken by their agents and assume liability for those actions. By providing a mechanism for principals to accept responsibility for their agents' actions, the doctrine of ratification helps to ensure that businesses and other organisations act responsibly in their dealings with the public.
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