Thursday, 30 July 2020

Ratification by the principal of act of agent-Twelve important rules

There are twelve rules governing ratification of act of agent by principal.
1) The contract must be made by the agent for or on account of the principal,and not on his own account.
2) The principal must be in existence at the time of the act.Thus, a newly formed Company can not ratify an act done in its name before its incorporation.
3) A transaction which is void ab initio can not be ratified.A principal can ratify only those acts which he is legally competent to do.Thus,there can not be ratification of a void contract.A minor,can not after attaining majority,ratify a contract made during his minority,because a minor's contract is absolutely void.
4) When the act of an agent is ratified, it establishes the fact that the act was really done with the authority of the principal.Thus ratification amounts to previous authority.And since a ratification is in law equivalent to a previous authority, a person not competent to authorize an act can not give it validity by ratifying it.
5) Since a ratification is in law equivalent to a previous authority,a person not competent to authorize an act can not give it validity by ratifying it.
    This would imply that the principal can ratify an act of his agent,only if at the time of ratification,he himself could have done that act.
6) Ratification may be express or may be implied in the conduct of the person on his behalf the act was done(S 197 of Indian Contract Act).
7) No valid ratification can be made by a person whose knowledge of the facts of the case is materially defective (S 198 of Indian Contract Act).
8) A person ratifying any unauthorized act done on his behalf ratifies the whole of the transaction of which such act forms a part(S 199 of Indian Contract Act).
9) An act done by one person on behalf of another,without such person's authority,which if done with authority would have the effect of subjecting a third person to damages or of terminating any right or interest of a third person can not by ratification be made to have such effect( S 200 of Indian Contract Act).
10) Where a time is limited for doing an act,the ratification must be made before the time has expired.
11) Where no time is limited,the ratification must be within a reasonable time.
12) Lastly ratification relates back to the contract of the agent.

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