Agency question from student

Hello Professor, I had a quick question regarding agency law, or more specifically the ratification portion.

Ratification

Principal will be liable to a third party for an unauthorized contract entered on its behalf, if the principal accepts benefits of the contract. The principal must have knowledge of the contract, the terms and nevertheless accept the benefits.

Does this mean that the principal, after giving either actual (implied or express) or apparent authority, and having knowledge of the contract its terms and its acceptance be ratified or must it be that he must have knowledge of the contract and terms and be required to accept the benefits?

Response:

Ratification only comes up when there is no authority at all.  So suppose my mother signs a lease of space located in Palm Springs on behalf of UWLA because she thinks we should have a branch campus there and it was a “good deal.”  She had no authority – period.  UWLA is not bound by the lease.  But now suppose the law school looks into and agrees that it was a good deal and moves in.  The law school has ratified the action my mother took by accepting the benefits of the contract.  Note:  The school must (as you said) have full knowledge of the terms of what it is ratifying.  There is no partial ratification.  It will be liable for the whole lease if it knew the terms of the whole lease and accepted the benefits.

Good question.

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