Mr. Veerbhan, Student of Maharshi Dayanand University, Rohtak
Meaning of Ratification
The doctrine of Ratification is defined from the Section 196 to 200 in the Indian Contract Act, 1872 that an act done by person who is not authorized to do it, but anyone who wants to act as an agent of others can be ratified with others. In simple words, when an agent done any act without proper authorization, consent or knowledge from the principal, then principal have right to ratify the unauthorized act.
Legal Maxim
The doctrine of Ratification is defined in the Latin Maxim “Omnis ratihabitio retrorahitur et mandato priori aequiparatur,” which translates to “every ratification is dragged back and treated as equivalent to a prior command or authority.”
ESSENTIALS FOR RATIFICATION
The doctrine of Ratification have following essentials.
Ratification must be done on behalf of another
The first and most essential to the doctrine of ratification is that the agent shall not doing any act for himself, but he must have done the act on the behalf of principal.
Ratification must be done by a person who is competent to authorized the transaction
It is essential that the principal who ratifying the act must have competent or enough authorize to ratifying the act. When agent work for alien enemy then it doesn’t matter whether the principal is authority or not as it doesn’t come under ratification[1]. Ratification and acceptance cannot be made for the act which is void or illegal.[2]
Person ratifying must have been in existence at the time of act
To ratify something it is most important that the thing must have exist. The rights and obligations that occur in contract or accordingly must be called the ratification date. Willies J. said “Only a person identified at the time the act is performed can ratify it. This individual must either exist in reality or be legally recognized”.[3]
Ratification of unauthorized act cannot injure third person
The act can’t ratify if it is caused any damage to third person. In case of Sucharita Pradhan v. U.P Twiga fiberglass ltd.[4], where one of several co-owners gave notice to terminate a tenancy, it was deemed invalid. Even when another co-owner attempted to ratify it through an affidavit in the eviction lawsuit, it did not validate the termination.
Ratification must be of the entire transaction and cannot be limited to one portion of it
Principal cannot ratify one portion of the act and rejecting the other portion of the same act.[5] The principal cannot work according to its benefits, depending on the specific ratification. Therefore, it is adopted when the provisions, rejection, and laws that adopt the rest are adopted throughout.
· Ratification must be done within reasonable time
An option of ratification must be done within reasonable time of the act claimed to be ratified. Ratification must be done in every case within a reasonable timing. And there must be a relationship of principal and agent.
RATIFICATION IN FOLLOWING CASES
Ratification of Acts by Public Servants
In the case Secy of State in Council for India v Kamachee Boye[6], Supreme court at Madras observed that “If there had been any doubt about the original intention of the Government, it has clearly ratified and adopted the acts of its agents which according to the principle in Buron v Denman is equivalent to previous authority.” However, the state’s liability is limited to the scope of authority actually conferred upon the public servant, rather than the apparent authority the agent may have held.
Ratification by Minor
In the case Mohori Bibi v. Dharmodas Ghose[7], the Privy Council unequivocally held that a minor’s contract is void ab initio and cannot be retrospectively validated through ratification, even upon the minor attaining majority. The court highlighted that a minor have a lacks of legal capacity to enter into a contract, either directly or through an agent. Consequently, such contract is void ab initio and can’t be cured by subsequent ratification.
Ratification of Illegal or Void Acts
In the La Banque Jacques-Cartier v La Banqued’ Epargne[8], the Privy Council observed that ratification “must be in relation to a transaction which may be valid in itself and not illegal”. The transaction which are void and unlawful will be ineffective ratifying transaction.
Ratification after Principal’s death
If an agent, who operates under the written authorization of the principal or owner, continues to present himself as an agent after the principal or owner passes away, and if an individual with the proper authority formalizes the agent’s actions in a legally recognized manner after the principal or owner’s death, the agent should be considered to have acted within the scope of his validly held authority as the successor.
IMPORTANCE OF RATIFICATION
Preserving Contractual Intentions
Ratification helps ensure that the reasonable expectations and intended contracts of the parties are upheld, even if the initial contract formalities were not met. It prevents agreements from being invalidated due to minor technical issues with the agent’s authority.
Facilitating Commercial Transaction
The doctrine of ratification allows principals to approve unauthorized contracts after the fact, ensuring smooth business operations. It offers a legal way to save agreements that might otherwise be invalidated.
Promoting Finality and Certainty
Properly applied ratification boosts the finality and predictability of contracts. Third parties can trust that their interactions with an agent will be honoured if the principal later confirms the transaction.
Aligning with Reasonable Expectations
The doctrine of ratification supports the reasonable expectations of third parties who acted in good faith, assuming the agent was properly authorized. By retrospectively validating the agent’s apparent authority, ratification upholds these justified expectations
Balancing competing Interests
Ratification strikes a balance between the principal’s consent and the interests of third parties. It enables the principal to approve unauthorized actions while ensuring that this approval does not unfairly harm others.
LEGAL CONSEQUENCES OF CONTRACT RATIFICATION
The Ratification of a contract have following legal consequences.
Binding Effect
After ratification, a contract becomes legally binding and enforceable. The ratifying party must fulfil their duties under the agreement, as though they originally signed it.
Waiver of Previous Defects
Ratification removes any previous defects, voidability, or unauthorized actions tied to the contract. By ratifying it, the party consents to disregard any issues that could have rendered the contract invalid or unenforceable before.
Protection from Legal Disputes
Ratifying a contract can help avoid future legal disputes by clearing up any doubts about the agreement’s validity. This is especially important when one party initially had the right to void the contract.
Restitutes And Compensation
When a contract is ratified, the ratifying party may need to provide restitution or compensation to the other party, especially if the contract was partially performed or if the ratifying party benefited from the agreement before the formal ratification.
Loss of Rights to Void
Once a contract is ratified, the party forfeits the right to void it. This is especially important for contracts that are voidable, such as those signed under duress or by minors, as ratification signifies the party’s agreement to be bound by the terms.
FAILURE TO RATIFY A CONTRACT
When a party fails to ratify a contract, following consequences may arise.
Voidability of the Contract
If a contract isn’t ratified, it can stay voidable. This means the party with the option to ratify it can later void the contract, making it unenforceable.
Lack of Legal Obligations
Without ratification, the parties might not be legally bound by the contract terms. This can cause disputes, with one party insisting the contract is enforceable and the other denying it.
Potential Legal Disputes
If a contract isn’t ratified, it can spark legal disputes, especially if one party thinks the contract is valid while the other doesn’t. These conflicts can lead to expensive litigation and strain relationships between the involved parties.
Restitution
If a contract remains unratified and one party has already fulfilled their obligations, they may pursue restitution or compensation for their efforts. This could result in legal action to reclaim damages or costs related to their performance.
CONCLUSION
Contract ratification in law validates voidable or incomplete agreements, ensuring they are enforceable. It is crucial for contracts involving minors, unauthorized agreements, or incomplete terms. By ratifying, parties confirm their validity, preventing disputes and maintaining legal standing. The Indian Contract Act, 1872, and judicial interpretations have shaped ratification, emphasizing intention, legality, and communication. Ratification balances the principal’s consent and third parties’ interests, safeguarding good-faith transactions.
[1] Boston Deep Sea Fishin & Ice Co. Ltd v. Farnham, (1957) 3 ALL. ER 204.
[2] Gauri Shankar v. Jawala Prasad, AIR 1930.
[3] Kelner v. Baxter, (1866) LR 2 CP 174
[4] Sucharita Pradhan v. U.P Twiga fiberglass ltd , AIR 2002 Del 1
[5] Bank of Australia v. Mc.Clintock (1922) 1AC 240
[6] Secy of State in Council for India v Kamachee Boye, 7 MIA 476, 539
[7] Mohori Bibi v. Dharmodas Ghose, ILR (1903) 30 CAL 539 (PC)
[8] La Banque Jacques-Cartier v La Banqued’ Epargne, (1887) LR 13 AC111 (PC)
