Ratification means the subsequent adoption and acceptance of an act originally done without instruction or authority. Soon after ratification, the person who has done the activity becomes agent and that person who has given ratification becomes principal.
Example: Anshul buys 5 bags of wheat on behalf of Ankul although Ankul did not appoint Anshul as his agent. On hearing this transaction, Ankul may accept or reject it. If he accept it, the act is ratified and anshul becomes his agent with retrospective effect.
Conditions Necessary for a Valid Ratification of the Acts of an Agent
- 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.
- 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.
- Ratification should be given within reasonable period after the activity. Where a time is expressly fixed for the erformanceof the contract, ratification must be made within that time.
- Whole transaction must be must be ratified – To ratification must be of the whole contract.Oncr a part is accepted, it is an implied acceptance of the whole contract (sec 199). There cannot be partial rejection and partial acceptance. Partial ratification carries no validity.
- The fact of ratification must be communicated to all parties in connection with the activity.
- Ratification attains validity only when it is given with full knowledge of facts relating to the activity (sec 198). the person ratifying the act should know all material facts related to the activity.
- 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.
- 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.
- 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.
- ratification should not be harmful to third party(Sec 200) 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.