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Published : November 16, 2010 | Author : Abhinav Kumar
Category : Contracts laws | Total Views : 31898 | Rating :

Abhinav Kumar
ABHINAV KUMAR, 2ND YEAR, NATIONAL LAW UNIVERSITY, ORISSA I am enthusiastic and multitalented person who have a passion to study law. I have a vision for my Nation and i want to do something extra ordinary in my life. i love to write poem on the contemporary issues and social issues as well. writing articles also a part of passion to give the shape too my opinion.

Contractual Validity Of Agreement Subject To Ratification

Ratification is in law equivalent to previous authority it may be expressed or it may be affected impliedly by conduct.[1] Section 196 and 197 of the act show that an act done by person who is not authorized to do it, but who purports to act as an agent for another person, can retrospectively ratified by such other person. From this it follows logically, that such an act on the part of the person purporting to act as agent is not void but voidable. If it is not ratified it becomes void but if it is ratified it will be validated. [2]

It is doubtful that whether the term “ratification” may properly be applied to the conduct of a person, who choose to treat as genuine a promissory note on which his signature has been forged.[3] It is rather on the principal of estoppel that such a person may, under such circumstances render himself liable.

Ratification in order to be effective can only be by an authority that is in existence on the day of transaction was entered into and it should also be competent to ratify.

There is ample material on record in the present case that the company had ratified the act of the person who had signed on behalf of the company even his act of signing on behalf of the company was without authority.

The doctrine of ratification comes into play when a person has done an act on behalf of another without his knowledge or consent. The doctrine gives the person on whose behalf the act is done an option either to adopt the act by ratification or to disown it. So, it can be derived that ratifications are either empress or implied. The former are made in express and direct terms of assent; the latter are such as the law presumes from the acts of the principal; as, if Soham buy goods for Rahul, and the latter, knowing the fact, receive them and apply them to his own use. By ratifying a contract a man adopts the agency; altogether, as well what is detrimental as that which is for his benefit.

Therefore ratification is a kind of affirmation of unauthorised acts. It is thus explained in section 196 of Indian Contract Act 1872 and in other section.

196. Right of a person as to acts done for him without his authority- Effects of ratification.-Where acts are done by one person on behalf of another, but without his knowledge or Authority, he may elect to ratify or to ratify or to disown such acts. If he ratifies them, the same effects will follow as if they had been performed by his authority.[4]
197. Ratification may be expressed or implied.-

Ratification may be expressed or may be implied in the conduct of the person on whose belief the acts are done.

198. Knowledge requisite for valid ratification.
Therefore as a general rule of this subject, the principal has the right to elect whether he will adopt the unauthorized act or not. But once doing a ratified act, upon a full knowledge of all the material circumstances, the ratification cannot be revoked or recalled, and the principal becomes bound as if he had originally authorized the act. So, the ratification of a lawful contract has a retrospective effect on the subject, and binds the principal from its date, and not only from the time of the ratification, but for the ratification is equivalent to an original authority, according to the maxim, that Omnis ratihabitio mandate aeguiparatur.

Therefore such ratification in general meanings relieve the agent from all responsibility on the contract, when we would otherwise have been liable for such kind of act. So an infant is not liable on his contracts; but if, after coming of age, he ratifies the contract by an actual or express declaration, he will be bound to perform it, as if it had been made after he attained full age. Hence it can be conferred that the ratification must be voluntary, deliberate, and intelligent, and the party must know that without it, he would not be bound to fulfil the obligation. But a confirmation or ratification of a contract, may be implied from acts of the infant after he becomes of age; as by enjoying or claiming a benefit under a contract be might have wholly rescinded and an infant partner will be liable for the contracts of the firm, or at least such as were known to him, if he, after becoming of age, confirm the contract of partnership by transacting business of the firm, receiving profits, and the like. We can take example of ratification of Treaties..

Research Methodology
Aim And Objective
From the ideas received about the topic this paper contains a descriptive and analytical study of the contractual validity of agreements in subject to ratification by others. Therefore, this is also an attempt to understand and analyze the concept of contract law given in reference to validity of agreements under ratification. So researcher has attempted to analysed the topic in descriptive way.

Sources Of Data-
The researcher has relied on secondary material collected from various books and articles. The researcher has also relied on the internet an efficient source of data.

Approach The researcher has followed the analytical approach and tried to understand and analyze the concept of ratification which has been closely explained in this project.

Research Question-
In this the researcher has tried to understand the importance of evidence and how relevant evidence is segregated from irrelevant evidence. He has tried to understand the impact of the theory contractual validity of agreements in terms of ratification, under the following headings:-

# Meaning and definition of ratification?
# Whether there is limitation to general rule in relation with project topic?
# How the project topic is related to vicarious liability?
# Meaning of free consent and its relation with the ratification?
# Ratification in the case of Minor’s Agreement?
# Ratification under principal’s death?
# What are the conditions of a valid ratification?
# What is the Effects of ratification?
# To know state’s liability for the agreements done by their officers?

Scope and Significance of the Study
As it is not possible by principal to do every deal by himself because it is very problematic to go to deal with every party at the time of forming agreements with them.As so the importance and advantages of having an ratification clause in contracts increases and this study strives to bring focus on those advantages. The project will also look into the matter of whether parties can ratify the contracts or not which is done on the behalf of actual principal.

So the researcher has concentrated the scope of study to analyze the validity of agreements in subject to ratification through different analysis of various agreements done under different situation and to know the validity of all those agreements done under those circumstances which are the subject of ratification.

Validity Of Consent In The Agreements Which Are Subject To Ratification
The English common law relating to the above topic report from the two Latin Maxims Qui Per Alium Facit Per seiprom facere Videtur and Qui Facit per alium facit perse thereby meaning “ He who does not act through another is deemed in law to do it himself” and ‘he who acts by another acts by himself”. The law of agency is based upon the consent of one party that the other party the agent shall act on his behalf and the other party consents to do so. According to CHITTY[5] “At common law the word Agency represents a body of general rules under which one person the agent has the power to change the legal relation of another, the principal.” According to ANSON “ Although at common law as a general rule A cannot by contract with B to confer rights or impose liabilities upon a third party, yet A may or act on the behalf of B with B’S authority for the purpose of bringing B ino legal relations with a third party.[6] So principal is bound by the act done by an agent or the contracts made by made by him on behalf of the principal in the same manner, as if the acts had been done or the contracts had been entered into by principal himself, in person.[7] Therefore when a contract is entered into through the medium of an agent the principal becomes liable towards the third party whether he has given his consent before or not, it does not matter even when such contracts are voidable in nature. Ordinarily, as the agent is only a connecting link, he is not liable personally towards the third party.[8] The power to ratify remains with the principal itself so consent given or not to agent it hardly matters because obligation part comes to principal.[9]

Conditions of a valid ratification.-
1) Act must be done on behalf of another.-
The first essential to the doctrine of ratification, with its necessary consequence of relating back, is that the agent shall not be acting of himself, but shall be intending to bind a named or ascertainable principal.[10] The agent must have done the act on the behalf of the supposed principal.[11] And the motive with the which the act done is immaterial.[12]

2) Person ratifying must have been in existence at the time of act.- it has been laid down that ratification , in order to be effective, can only be by an authority that is in existence on the date the transaction was entered into and it should also be competent to ratify.[13]

3) The thing must exist- In order to recognise or ratify something it is necessary that thing must exist,[14] That is the contract, or some rights or obligations arising under it, must be substisting on the date of Ratification.

4) Ratification must be with full knowledge of all facts. in order to establish case of ratification it is essential that the party ratifying should be conscious.

5) Ratifier must have been competent to authorise the act. The act to be ratified must be one which the person ratifying had himself power to to do and the ratification must take place at a time, when and under circumstances under which, the ratifying party might himself have lawfully done the act which ihe ratifies.[15]

In the words of Sir B. Peacock:  “ A ratification is in law treated as equivalent to a previous authority, and it follows that, asa general rule, a person or body of persons, not competent to authorise an act, cannot give validityby ratifying it”[16]

In Suraj Narain v. N.W.F. Province,[17] it was held that where the responsibility for the passing of a particular kind of order is by statute vested in specific authority.

6) Ratification to be exercised within reasonable time. An option of ratification must be exercised within a reasonable time of the act purporated to be ratified,[18] “ ratification” in every case within a reasonable time.

7) Communication of ratification to other side. There can be no ratification of contract unless it is communicated to the other side or subsequent action shows an approbation of the contract.[19]

8) Act to be ratified must not be void or illegal. An act which is void or illegal cannot be validated by any amount of ratifications.[20]

9) There must be relationship of principal and agent.- Another condition to be satisfied is that there must be a relationship of principal and agent.[21]

Validity Of Minor’s Contract And State Liability For The Act Of Their Officers
In Minor’s case,
The contract act simply states that a person who is of the age of majority is competent to contract, and thus, a minor’s is not competent to contract. In Mohori Bibee v. Dhurmodas Ghose[22] Privy Council made it clear that that contract or agreement done with Minor is void.

No Ratification of a minor’s agreement.
An agreement entered into by a minor is void ab initio. a minor can’t ratify an agreement on attaining the age of majority validate the same.[23]
One of the reason for the rule that a minor cannot ratify an agreement after attaining majority is that when the agreement was entered into during the minority there was no ‘proper consideration’ and the ‘bad consideration’ is not enough for validating that agreement by its ratification. This will be clear from the observation of SULAIMAN, C.J. of the Allahabad High Court:[24]
“Under section 11 a minor is not competent to contract he is disqualified from contracting. He can, therefore, neither make avlid proposal nor make a valid acceptance as defined in section-2, clause (a) and (b). He cannot, therefore, for the purposes of this Act be strictly called a promisor within the meaning of clause (c). Nor can, therefore, anything done by the promise be strictly called a consideration at the desire of a promisor as contemplated by clause (d). It may, therefore, br urged that an argument by a minor cannot be strictly as being for “consideration’.....

If the part of the benefit was received by a person during his minority and the other part after attaining the age of majority, a promise by him after attaining majority to pay an amount in respect of both the benefits is enforceable, as that constitutes a valid consideration for the promise.[25] A minor can’t even enter into a contract through guardian or any other agent because it is void contract and the same is not capable of ratification by aminor, on his attaining majority. According to Privy Council[26] stated that “ A ratification in law is treated as equivalent to a previous authority, and it follows that as a general rule, a person or body of persons, not competent to authorise an act can’t give validity after ratifying it.

State liability for the act officers
The matter has been discussed under sec.65. In Chatturbhuj Vithaldas Jasari v. Moreshwar Parashram,[27] the contention was raised that the contracts having not been expressed to be made by the President as required by Article 299 of the Indian constitution were void, but it was ruled that the contracts in question are not void simply because the state officers who made such contracts could be sued upon them, and they could be by the Government.[28]

Ratification after principal’s death:-
It is common practice that if an agent functioning undera written authority of the principal holds himself out as such agent after after the death of the principal and if person competent to ratify his action after the death of the principal ratify the same in manner known to law, then the agent should be deemed to have acted within the limits of authority and that he validly holds himself out as agent of the subsequent proprietors.[29]

Effects of ratification
It is established that rule that an act done for another by a person not assuming to act for himself, but for such other person, though without any precedent authority whatever, becomes the act of the principal if subsequently ratified by him, within a reasonable time. In the case of a continuing obligation, such as the the engagement of a servant or the continuance of tenancy, an absence of repudiation or acceptance of service or rent with full knowledge of the facts, implied an undertaking to adhere to the obligation and operates as ratification or renewal of the old contract by the party accepting the service or rent.[30]
So the ratification relates back to the original making of contract and confirms it from that time. It places all the parties in exactly the same position[31] as they would have occupied in the case of a precedent agency by formal constitution. So ratification will support an action previously brought upon the contract in the name of the principal, though without his knowledge. The same is equally true of arbitration.[32]

From this project the researcher came to the conclusion that contractual validity agreement in subject to ratification clearly says that where acts are done by one person on the behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. If he ratifies them, the same effects will follow as if they had been performed by his authority. Agreements which are subject to ratification are voidable in nature. If it is ratifies by the principal then it becomes legally valid in the court of law. If it is not ratified then the contract will lose its validity. Similarly if the principal has not consented and not given his consent to his agent to enter into agreement still he owes a duty towards third party because principal is bound by the acts done by an agent or the contracts made by him on behalf of the principal in the same manner, as if the acts had been done or the contracts had been entered into by the principal himself, in person. The principal is vicarious liable for the frauds or torts committed by the agent, while acting in the course of the business for the principal.

Similarly in the agreements which are related to minor’s are void ab initio because the are not competent to contract and the contract is void. So through this project great effort has been put by the researcher to bring the the best about the above the topic.

Table Of Cases

1.Imperial Bank of Canada v. Mary Victoria Begley, A.IR.1936 P.C 193 at p.197.
2.Marsh V. Joseph [1897] 1 ch. 214; Surendra Nath v. Kedar Nath, A.I.R 1936 CAL. 8
3.Subbaraya Chetty v. Nagappa Chetty, A.I.R 1927 mad. 805: 103 I.C. 150
4.Mohammad Tajuddin v. Gulam Mohd., A.I.R. 1960 A.P 340 at p. 342
5.Suckchand v. Girdhari Das, A.I.R 1926 Cal. 1215 at P. 1217: 4 C.L.J 127: 97 I.C. 1016 (There Could Be No Recognition Of Tenancy By The Landlord After The Tenancy Ceased)
6. Chatturbhuj Vithaldas Jasari v. Moreshwar Parashram, (1903) 30 IA 114 (PC).
7.Indran Ramaswamy v. Ananthappa, 16 MLJ 422
8.Suraj Narain v. Sukhu Aheer, AIR 1928 All 440.
9.Kundan Bidi v. Sree Narayan, (1906-07) 11 CWN 135.
10.Irvine v. Union Bank Of Australia, ILR (1877) 3 Cal 283 (PC).

Books1. 1 I H. G. Beale, Chitty on Contracts (30th ed. 2008)
2. 1 I R.G. Padia. Pollock & Mulla’s Indian Contract and Specific Relief Act (13th ed. 2007)
3. P.S Atiyah, Introduction to the Law of Contract (Stephen A. Smith ed., 2007)
4. Andrew Grubb, The Law of Contract (3rd ed. 2007)
5. J Beastson, Anson’s Law of Contract (28th ed. 2008)
7. MLJ Law OF CONTRACT AND SPECIFIC RELIEF 2nd ed. 2009 justice araman vol. 1

Articles1. Atul Chitale, Section 2: Country Overviews: India, Asia Pacific Arbitration Review, 2007
2. Mayer Brown, Drafting fair, efficient and enforceable agreements, Counsel to Counsel, May 2008

Online Sources1. “Ratification” available at http://www.findlawindia.com/ratification.htm 20/3/2010
2. “ratification of contract” available at http:// www.getfreelegalforms.com/ratification.html 22/3/2010
3. “Indian Law Applicable to Agreement subject to ratification – Consequences” available at www.unidroit.org/english/principles/contracts/
4. pter1b.htm 22/3/2010
5. “ratification Clause” available www.lectlaw.com/ ratification.htm 22/3/2010 STATUTES1. Indian Contract Act, 1872
2. The constitution of India. Art. 299
[1] Jai Narain Lal Tandon v. Bechoo Lal, A.I.R. 1938 All. 369 at p.373.
[2] Bhawani Shankar v. Gordhandas Jamunadas, A.I.R 1943 P.C. 66 AT P. 68.
[3] Book v. Hook, L.R. 5 Ex. 89.
[4] Williams v. North China insurance Co. (1876) 1 CPD 757
[5] Chitty on Contracts ( special contract Act) 27th Edition, para 31-00
[6] Ansons Law of Contract, 28th Edition, page 663
[7] SEC.226
[8] Sec.230
[9] Law of Contract and Specific Relief by justice A. RAMAN 2nd Edition, page 253
[10] Imperial Bank of Canada v. Mary Victoria Begley, A.IR.1936 P.C 193 at p.197.
[11] Marsh V. Joseph [1897] 1 ch. 214; Surendra Nath v. Kedar Nath, A.I.R 1936 CAL. 8
[12] Subbaraya Chetty v. Nagappa Chetty, A.I.R 1927 mad. 805: 103 I.C. 150
[13] Mohammad Tajuddin v. Gulam Mohd., A.I.R. 1960 A.P 340 at p. 342
[14] Suckchand v. Girdhari Das, A.I.R 1926 Cal. 1215 at P. 1217: 4 C.L.J 127: 97 I.C. 1016 (There Could Be No Recognition Of Tenancy By The Landlord After The Tenancy Ceased)
[15] Bird v. Brown (1850) 4 EX. 786 : 80 R.R 775
[16] Irvine v. Union Bank Of Australia, I.L.R C Cal. 280 at p. 284 (P.C.)
[17] A.I.R. 1942 F.C. 3.
[18] Madura Municipality v. Alagiri Swami Naidu, A.I.R. 1939 Mad. 957 at p. 960
[19] Ganpat Rao v. Iswar Singh, A.I.R 1938 Nag. 482 at p. 483
[20] Kishor Das v. Raman Lal, A.I.R. 1943 Bom. 362 at P. 364
[21] Kalyani Achi v. K.N.S.R.M.A.R Ramanathan Chetty, 28 I.C. 135 AT PP. 137-38
[22] (1903) 30 IA 114 (PC).
[23] Indran Ramaswamy v. Ananthappa, 16 MLJ 422
[24] Suraj Narain v. Sukhu Aheer, AIR 1928 All 440.
[25] Kundan Bidi v. Sree Narayan, (1906-07) 11 CWN 135.
[26] Irvine v. Union Bank Of Australia, ILR (1877) 3 Cal 283 (PC).
[27] A.I.R 1954 S.C. 236.
[28] Sewakissendas Bhather v. Dominion of India, A.I.R. 1957 Cal. 617.
[29] Management of Sri Sivasakthi Bus Service v. K.P. Gopal, A.I.R. 1971 Mad. 434 at p. 435
[30] Huddain Ali Murja v. Mohd. Azim Khan, 31 I.C. 728 at P. 736.
[31] Supra note 8.
[32] Saturjit v. Dulhin, I.L.R. 124 Cal. 469.

Authors contact info - articles The  author can be reached at: abhinavkumar16@legalserviceindia.com

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