Agency by Ratification Meaning in Law
Agency by ratification meaning in law is provided under sections 196 to 200 of the Indian Contract Act, 1872. A contract of agency by ratification is created when the principal agrees or consents to the act of the agent to whom he has not given authority to do such an act.
Table of Contents
Agency by ratification is created when a person accepts or approves an act done by a person who acted on his behalf without his permission or knowledge. Whereas, this s known as an ex-post-facto agency.
As per section 196 of the Indian Contract Act, 1872, the effect of ratification of agency has been provided as a relationship of the agency will come into existence when the act of the parties is ratified and it will be if he had previously authorized the person to act as his agent.
In other words, the agency by ratification means ratification is to make the agent's unauthorised acts authorized acts, similarly, if they had been performed under the authority of the principal.
Essentials of Valid Ratification of Agency
Essentials of valid ratification of agency, the essential conditions are provided under sections 198 to 200 of the Indian Contract Act, 1872. These are;
Full Knowledge
As per section 198 of the Contract Act, it is stated that no valid ratification of agency can be made by a person whose knowledge of the facts of the case is defective.
Illustration
A authorized B as his agent to purchase fruits from the market for him. But, B supplied his own fruits to A at a higher price. A ratified the purchase without having knowledge of the fact that the purchased fruits is belonging to B and he charged a higher price than the market value. Therefore, the ratification made by A was not valid because it was without the full knowledge of the facts of the case.
Therefore, to make valid ratification of an agency contract, the ratification made by the person must have full knowledge of the facts of the case.
Whole Transactions
As per section 199 of the Indian Contract Act, 1872, it is provided that a person ratifying any unauthorized act done on his behalf ratifies the whole of the transactions of which such act formed a part.
Therefore, the principal cannot adopt only a part of that transaction which is a favour to him and reject the other part of that transaction which is prejudicial to him. Hence, the principal must ratify the whole transaction in total or reject the entire transaction in total.
Ratification of Unauthorised Act cannot Injure Third Person
As per section 200 of the Indian Contract Act, 1872, it is provided that an act done by one person on behalf of another person without such other persons' authority, would have the effect of subjecting a third person to damages or terminating any right or interest of a third person, cannot by ratification be made to have such effect.
Within Reasonable Period
The ratification of the contract of agency is binding only if it is made within a reasonable period after the act to be ratified is done.
Lawful Acts
If the principal is willing to ratify the agency then only those acts can be ratified which are lawful acts. Therefore, if any transaction is unauthorised or unlawful then the principal cannot ratify such transaction. Therefore, the void contracts cannot be ratified.
In the contract of the agency, if there is any criminal act then such an act cannot be ratified by the principal.
Acts Within the Power of Principal
Only those acts are ratified which are within the power or control of the principal and if any acct is beyond the control or power of the principal then the such act cannot be ratified by the principal.
A director of a non-trading company borrowed Rs. 10 lakh on behalf of the company. The company cannot ratify such an act of the director as become beyond the power and control of the company.
Contractual Capacity
It is essential that the principal must have the contractual capacity as specified under section 10 of the Indian Contract Act, 1872, both at the time of the formation of the contracting agency and at the time of ratification of the agency contract, both the contracting parties should be a competent party to enter into a contract.
Whereas, if the principal does not have the capacity then the contract itself becomes null and void and therefore, there could not be any ratification of the contract of agency by the principal.
Illustration
A miner made a contract on his behalf during his minority and after attaining the age of majority the cannot be ratified as the contract was void.
FAQ
What is an agency by ratification?
Agency by ratification is created when a person accepts or approves an act done by a person who acted on his behalf without his permission or knowledge. Whereas, this s known as an ex-post-facto agency.
What do you mean by ratification?
After approval has been granted under a state's own internal procedures, it will notify the other parties that they consent to be bound by the treaty.
What is ratification in the Contract Act?
As per section 196 of the Indian Contract Act, 1872, the effect of ratification of agency has been provided as a relationship of the agency will come into existence when the act of the parties is ratified and it will be if he had previously authorized the person to act as his agent.
Conclusion
Agency by ratification is created when the principal agrees or consents to the act of the agent to whom he has not given authority to do such act. Agency by ratification meaning in law is provided under sections 196 to 200 of the Indian Contract Act, 1872.
Referred Books:
- Law of Contract - Bare Act 2021 Edition Professional
- The Indian Contract Act 1872 Bare Act 2021 Edition
- Law of Contract & Specific Relief Dr Avtar Singh Latest Edition-2020
- Pollock & Mulla - The Indian Contract Act, 1872
- CONTRACT Paper I - By R.K. Bangia [Edtion 2019 - 2020]
- CONTRACT Paper-II - By R. K. Bangia
- NOTES ON INDIAN CONTRACT ACT 1872: BEST NOTES FOR LAW STUDENTS