Agency by ratification arises where the principal subsequently confirms and adopts a contract entered into on his behalf by a person who, at the time of the Contract, had no authority to act for the principal or who had exceeded his authority. Ratification, is retrospective, i.e. it dates back to the time of the original act, clothing it with authority.
The following conditions must be satisfied for a ratification to be effective:
- The contract must be ratified in its entirety, the principal cannot choose which parts he wishes to ratify repudiating the rest.
- The agent must have contracted as an agent, naming or sufficiently identifying his principal at the time of the contract. An undisclosed principal cannot ratify.
- The principal must have been in actual existence at the time of the h contract.
- The contract must be one which the principal had power to make on is behalf. Thus, a company cannot ratify a contract entered into by a director which exceeds the power of the company as laid down in its memorandum of association
- The contract must be entered into for a principal who himself is a capacity of association to contract. Thus, a contract entered into on behalf of an infant is not capable of being ratified.