Introduction. Ratification is an important concept under the law of agency. It allows a person (the principal) to approve an act done on their behalf without authority. When ratified, the act becomes binding as if it had been authorised from the beginning. Ratification thus creates a retrospective agency relationship, validating acts done without prior consent.
Meaning of Valid Ratification
According to Section 196–200 of the Indian Contract Act, ratification means the principal’s adoption or confirmation of an act done by another person on his behalf without authority. Once validly ratified, the act becomes fully binding on the principal and the third party. Ratification may be express (written or verbal) or implied (conduct showing acceptance).
The effect of ratification is that the act is treated as if the agent had authority from the very beginning.
Essentials of Valid Ratification
For ratification to be valid, certain legal conditions must be satisfied.
1. The Act Must Be Done on Behalf of the Principal
The person acting must have intended to act for the principal. A principal cannot ratify acts done on behalf of another person.
Example: If A buys goods in his own name, P cannot later ratify.
2. Principal Must Be in Existence at the Time of Act
A person cannot ratify an act done when he was not in existence. For example, a company cannot ratify pre-incorporation contracts.
3. Principal Must Have Full Knowledge of Material Facts
Ratification is valid only when the principal is fully aware of all relevant facts. Consent obtained by hiding facts makes ratification invalid.
4. Ratification Must Be Within Reasonable Time
Ratification must occur before the third party withdraws or circumstances materially change. Unreasonable delay invalidates ratification.
5. Act Must Be Capable of Ratification
Only lawful acts can be ratified. Illegal, void, or impossible acts cannot be validated by ratification.
6. Ratification Must Be of Whole Transaction
The principal cannot partially ratify beneficial parts and reject the rest. Ratification must be total and unconditional.
7. Principal Must Have Capacity to Contract
At the time of ratification, the principal must be competent to contract. Minors or persons of unsound mind cannot ratify acts.
8. Ratification Should Not Injure Third Parties
Ratification cannot be used to harm third parties or to validate acts that adversely affect their rights.
9. Ratification May Be Express or Implied
Express ratification occurs through writing or oral declaration. Implied ratification occurs when the principal accepts benefits arising from the act.
Effects of Valid Ratification
- The act becomes binding as if originally authorised.
- The agent’s authority relates back to the date of the act.
- The principal assumes all rights and liabilities arising from the act.
- The third party is bound unless circumstances have materially changed.
Extended Explanation
Ratification plays a vital role in business transactions where acts may be performed without prior authority. It preserves commercial flexibility by allowing principals to adopt beneficial acts while ensuring fairness through strict conditions. The retrospective effect ensures continuity of contractual relations and protects third-party expectations.
Conclusion: Valid ratification is the principal’s approval of an unauthorised act done on his behalf. To be effective, the act must be intended for the principal, lawful, ratified within a reasonable time, fully known to the principal, and accepted wholly. These essentials ensure that ratification does not cause injustice and maintains the integrity of contractual dealings.