This article is written by Kanika Aggarwal, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.
The Doctrine of Ratification is an important concept under Indian Contract Act, 1872 and is explained via legal maxim & Sections 196 to 200 under the Act.
Table of Contents
Meaning
The basic meaning of Ratification is “an act of voting on a decision or signing a written agreement to make it official”.
Legal Meaning of Ratification is “The consent to an act that has already been performed”. GIVE AN EXAMPLE OR ILLUSTRATION
Legal Maxim
The Latin maxim “Omnis ratihabitio retrorahitur et mandato priori aequiparatur”, which means that every ratification is dragged back and treated as equal to a command or previous authority. In simple terms, it means that Doctrine of ratification comes into a picture if a person has done something on behalf of another person without any authority, knowledge or consent, then if such “other person” ratifies the same, then the same result would come as if the act was done on his own.
Ratification under the Indian Contract Act, 1872
As per S. 196 of Indian Contract Act, 1872, A person can elect to ratify or disown the act of another, when such other person performs any act on behalf of him without his authority, knowledge or consent.
For Example – “A” sells good of “B” on credit to “C” without any authority. Then in such a case, “B” may ratify the same or void the transaction by not ratifying the same.
As per S. 197 of Indian Contract Act, 1872, Ratification may either be expressed or implied on behalf of that person who is in a position of election of option of ratifying or disowning the transaction.
For Example –
- “A” lends money from “B” to “C” on interest. Then in such case, if “B” accepts the interest from “C”. This is implied ratification under Indian Contract Act, 1872.
- “A” sells good of “B” on credit to “C” without any authority. Then in such a case, “B” accepts the money from “C” after one month. This is expressed ratification under Indian Contract Act, 1872.
As per S. 198 of Indian Contract Act, 1872, If A person is ratifying act of another person, then such person must have complete knowledge of facts. Ratification is considered to be invalid if a person ratifies the act with knowledge of the facts of the case is not complete.
For Example – “A” sells good of “B” on credit to “C” without any authority & “A” does not provide the material fact that on what price the goods have been sold then ratification of transaction by “B” will be invalid.
As per S. 199 of Indian Contract Act, 1872, If A person is ratifying a single act of another person of a transaction, then such ratification would be considered for whole transaction but not for a single act.
As per S. 200 of Indian Contract Act, 1872, Any act done by a person on behalf of another person without any authority, knowledge or consent, and 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, cannot, by ratification, be made to have such effect.
Evolution of Doctrine of Ratification through Landmark Judgments
Intention and Ratification
In a case the P. C. held that no ratification can be made without an intention and no intention can be made to ratify any non-legal or non-regular act without there being knowledge of its illegality.
In it was held that in order to bind the principal or owner by doctrine of ratification it must be shown that the ratification has been done by him with an absolute knowledge of all relevant facts connected with the transaction to which it relates.
Ratification for Act which is not legal in nature
In a case it was held that if a contract is made which was non-legal in nature, and when it was legally not possible to do so, it cannot be enforceable even it has become legally possible to carry out the same contract.
Similarly, it was held that ratification and acceptance of transaction cannot be made for such transaction which is void or illegal.
Ratification for acts of Public Servants
Acts those are done by Govt. Officials can be ratified in the same way as private transactions, by simple declarations or by conduct but officer should be acting in accordance with discharge of duty. There is only one difference between private agents and government officials, which is referred as principal or owner of private agent is liable to the extent of power it has apparently given to his agent whereas state will be liable only to the extent of power it has actually given to its officials.
Ratification by Minor
In a case it was held that a person under 18 years of age mortgaged his house in favour of a money lender for a loan of Rs. 30000. After mortgaging the actual amount of loan received was less than 30000. The plaintiff stated that, when he mortgaged his house, he was under 18 years of age, so the contract with the money lender was void. It was held that contract with a person under 18 years of age is void. further, clarified that a person under 18 years of age can’t even enter into contract through guardian or any other agent because it would be a void contract and the same is not capable of ratification by a person under 18 years of age.
Communication of Ratification
Communication of ratification to another party is necessary or the contract if ratified can be shown by more subsequent transactions are held as legal.
In a case, a certificate of indebtedness was given by an individual on attaining majority as renewal of another certificate of indebtedness given by him throughout his minority in thought of cash then borrowed. Held, because the thought for the certificate of indebtedness is simply the note dead throughout minority, the recent certificate of indebtedness was not enforceable.
Ratification after principal or owner’s death
In general practice, it is being followed that if an agent functioning under written authority of the principal or owner holds himself out in and of itself agent when the death of the principal or owner and if person competent to formalize his action when the death of the principal or owner formalize identical in manner famed to law, then the agent ought to be deemed to own acted at intervals the boundaries of authority which he with validity holds himself out as agent of the next proprietors.
Critical analysis of the doctrine
As a component belief within the law of agency, confirmation is every useful as a smart matter and somewhat ragged from the angle of theory. This theory consists of a gaggle action thereto the principal or owner is definite by once the agents performs an associated unauthorised act. the smart worth of enabling principal or owners to create the legal consequences of actual authority once the actual fact of the associate agent’s unauthorized action is easy. This belief helps in instructive circumstances for the principal or owner or rather the other parties, that were earlier unsure or ambiguous. as an example, confirmation may serve to reassure a fourth party committed to the enforceability of the contract between the principal or owner and thus the third party.
The doctrine’s theoretical unevenness and its variability across systems follow inevitably from the actual fact that confirmation reflects a trade-off between the sometimes-conflicting demands of two basic considerations. On the one hand, to be effective as a confirmation the principal or owner’s act ought to mirror the principal or owner’s consent, cherish the consent by the principal or owner that underlies the creation of actual authority. On the other hand, considerations of fairness to third parties want that confirmation belief together constrain the extent of a principal or owner’s power to bind the third party once the actual fact of associate agent’s unauthorized action, distinct from whether or not or not the principal or owner consents to be sure.
Conclusion
According to the philosophy of AN approval, the agent can do some acts out of authority but the actual power vests with the principal or owner only as he has the power to approve or disapprove identical. If the act is sanctioned then it will be treated as a result of the act was finished with the permission of the principal or owner. If not, then the contract will lose its validity.
However, the principal or owner is to boot sure by certain limitations that area unit mentioned on top of. Similarly, if the principal or owner has not given his authority, he will still be certain to contracts entered by the agent with third parties, as a result of the principal or owner is for certain by the acts of the agents at intervals identical manner as if the acts were done by him only. The principal or owner is in control of the frauds or torts committed by the agent, whereas he was acting at intervals the course of the business for the principal or owner
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