IV. AGE! EAS iat la(eda)* Agency by ratification is when the principal approves an act of the agent (which is not allowed to be done). Itis also known as ex-post facto agency which means agency, arising after the event. * According to Section 197, the ratification of an act can be express, or it can be implied from the conduct of the person ‘on whose-behalf it has been done . Ratification relates back to the date when the act was done by the agent. It is but the adoption of the old contract. It only endorses the unauthorised act of the agent as authorised.* A gives some money belonging to B as loan to C without B’s knowledge. Later B receives interest on the loan from C. B's conduct in this case implies his acceptance of A's action.(1) The act must be in the name of the principal * For a legal ratification, it is essential that the act of the agent is for, and on behalf of, the principal and not in the name of the agent. * In other words, the agent must act as an agent. If the agent has acted for himself and on his own account, the principal cannot be held responsible to ratify such action.(2) Ratification must be made by the person on whose behalf the act was done * Ratification implies that the act is ratified by the person on whose behalf it was done. Ratification by a third party has no legal significance.Example * If A has given a loan of B's money to C, and D ratifies A's action, the ratification would not be valid. The ratification would have to be from B to be valid.(3) The principal must be in existence when the contract is made * Ratification is only possible when the principal exists.Example * A company, cannot ratify the contracts entered into by the promoters on its behalf before its incorporation.(4) The principal must have contractual capacity + It is essential for ratification that the principal has contractual capacity both at the time of contract and at the time of ratification. It is necessary because ratification by the principal implies his acceptance of the contract at the time the agent makes it. If the principal was not competent to enter into a contract at the time the contract was entered into, he cannot later validate the contract by verifying it.Example * A person cannot ratify the contracts made by him when he was a minor even when he becomes a major.(5) Only lawful acts can be ratified * Acts which are void from the legal standpoint cannot be ratified. All acts which are against the law, and are punishable by law, cannot be ratified.Examples a. A contract made under forged signature of a party cannot be ratified. b, Payment of dividend out of capital is void and cannot be ratified.(6) Ratification must be with full knowledge of material facts * According to Section 198, it is essential that the person doing the ratification has full knowledge of what he is ratifying, otherwise the ratification will not be valid. If the principal proves that he was not aware of the facts when he made the ratification, and such knowledge was vital for him to ratify the contract, the. principal will not be bound by such ratification.(7) The whole transaction must be ratified * A contract cannot be ratified in parts and repudiated in part. For a valid ratification, the whole transaction must be ratified.Example * if an agent purchases without authority 20 bonds, it is not open to the principal to ratify 12 of them, without approving of the other 8 bonds. If he has to ratify than it must be of whole 20 bonds.(8) Ratification should not put a third party to damages * According to Section 200, when interest of third parties are likely to be affected, the principle of ratification does not apply.Example * Hari holds a lease to some land from Mohan which can be terminated at a month's notice. Shekhar, without being authorised by Mohan, gives notice to Hari of the termination of lease. The notice cannot be ratified by Mohan so as to be binding on Hari.(9) Ratification must be within reasonable time * If a time limit is stipulated for ratification, it must be done within that time. If the limit has expired, the ratification is not valid. In case there is ‘no time limit, the ratification should be done within a reasonable time. Reasonable time depends upon the circumstances of the case.Example * The time for commencement of performance of the contract was September but the Board ratified the tender in October, when the other party had already withdrawn his tender. Ratification was held to be too late.(10) Ratification may be express or implied * Ratification may be in express words or in writing and it can also be implied from the conduct of the person on whose behalf the act was done.Example * A without authority buys goods for B. Afterwards B sells them to C on his own account; B's conduct implies a ratification of the purchase made for him by A.(11) Ratification must be communicated * The ratification must be communicated to the third Party well in time so as to be binding on the third party. * There can be no valid ratification of an act unless it is communicated to the other party.12. The transaction must have been subsisting at the time when it is ratified Before any act can be ratified, it must exist at the date of ratification. To constitute valid ratification, the approval of a transaction must occur before the other party had withdrawn from it and before the agreement has been terminated or discharged.Example * A enters into a contract with B, representing himself as the agent of C, without C's authority, but before C ratifies it B rescind the contract. C cannot ratify it after such rescission.13, The principal must have signified his unconditional acceptance of the act * The principal must accept the act of the agent unconditionally. Where the acceptance is qualified or conditional ratification is invalid.The principal becomes liable for the act of the agent after he ratifies the act. The effect of ratification is retrospective, which means that the liability of the principal is deemed to commence from the date when the act was done. Madan, without any authoritysimakes a contract to buy a car for Vasudev from Rajinden on 20 August. Vasudev gives his ratification on 28 August. in such case, the contract between Vasudev and Rajinder would deem to have been made on 20 ‘August. The principals ratification establishes a contract between him and the third party which releases the agent from his liability, and he becomes entitled to receive his commission and other benefits that he would normally receive as an agent.