Agency by Ratification
Subsequent adoption of an
activity is called ratification. Soon after ratification, the person who has
done the activity becomes agent and that person who has given ratification
becomes principal.
Ratification is of two
types. Namely;
·
Express Ratification and
·
Implied Ratification.
The ratification where there is wording and expression is called
express ratification. For example: Without
A`s direction, B has purchased goods for the sake of A from C. There after, A
has given his Support to B`s activity, it is called ratification and now A is
principal and b is agent.
The ratification where
there is no expression is called implied ratification. Here the mode of
behavior of the party indicates that support is given to activity concern. For example: Mr. Q
has P`s money with him. Without P`s direction Q has lent that amount to R.
Thereafter, R pays interest directly to P and P has taken the amount of
interest. It indicates that P has given his support to Q`s activity.
Essentials of Valid
Ratification:
1.
The person, who is going to give ratification, must be in
existence at the time of activity. Let us consider pre-incorporation contracts
made by promoters. Company comes into existence on the date of incorporation.
Therefore company is not in existence at the time of pre-incorporation
contracts. If company gives ratification to pre incorporation contracts, it is
not valid ratification. Hence to pre-incorporation contracts, promoters are
personally liable.
2.
The person who is going to give ratification should have
capacity to contract, at the time of activity as well as at the time of
ratification. In Armugan Vs Dorai Singh the minor obtains loan from money
lender and executes a deed. Before repayment of debt, he becomes a major and
executes another bond. Court decides that the second bond also is not valid
because the person who has given ratification has no capacity to contract at
the time of activity i.e. at the time of getting loan.
3.
Ratification should be given within reasonable period after the
activity the concept of reasonable period depends upon nature of the situation.
4.
Ratification must be absolute. To entire activity ratification
is to be given. Partial ratification carries no validity.
5.
The fact of ratification must be communicated to all parties in
connection with the activity.
6.
Ratification attains validity only when it is given with full
knowledge of facts relating to the activity.
7.
The activity which is going to be ratified must be a lawful
activity. For
example: for the
sake of A, B has murdered C. If A gives his support to B`s activity, it is not
valid ratification.
8.
The person who is going to give ratification should have right
to do such activities. For example: If company gives ratification to an
Ultravires activity it is not valid.
9.
Ratification relates back to date of activity. Though
ratification takes place after the date of activity, it will be assumed that
ratification is given on the date of activity.
10.
Ratification should not lead to breach of contract. In other
words ratification should not be harmful to third party. For example: There
is a rental agreement between A and B according to which three months notice is
needed at the time of vacation of house. On one day C, A`s son, has asked B to
vacate the house on that day itself. A has given his support to C`s activity.
It is not valid ratification because it leads to breach of rental agreement and
at the same time it is harmful to B.
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