Agency by ratification and the conditions of a valid ratification

Agency by ratification. Someone may act in another's name without that person's knowledge or authority. The person named can then choose to adopt the act or reject it; if he adopts it, it binds him just as if he had authorised it in advance (s. 196). Adoption may be in words or inferred from conduct (s. 197).

Effect. Once ratified, the act has the same effect as if it had been done with the principal's authority, so the adoption reaches back to the date of the act. Example (ours): a branch manager, without authority, books a stall at a trade fair in the company's name; when the company later pays the booking fee, the booking binds it from the day it was made.

Conditions for a valid ratification:

1. Acting for the ratifier: the act must have been done on behalf of the person who ratifies it.
2. A principal in existence and competent: a person who is of the age of majority and of sound mind may employ an agent (s. 183). It follows that the person ratifying must be one who could have appointed an agent: he must have existed, and been competent, when the act was done, and be competent when he ratifies. A company cannot ratify a contract made for it before it was incorporated.
3. Full knowledge: a ratification given by someone whose knowledge of the facts is materially defective is not valid (s. 198).
4. The whole transaction: he must adopt or reject it in full; he cannot keep the part that suits him and refuse the rest (s. 199).
5. No harm to third persons: ratification cannot expose a third person to damages, or take away his rights or interest, where the act, had it been authorised, would have done so (s. 200).
6. Reasonable time and communication: the ratification must come within a reasonable time and be communicated to the other party.
7. A lawful act: only an act the principal could lawfully have authorised can be ratified; a void or illegal act cannot be.