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Which of the following statements concerning a principal ratifying a contract formed by an agent is correct?
? The principal need not have existed when the contract was made
? The principal need not have had legal capacity when the contract was made
? The principal must communicate their ratification of the contract clearly to the third party
? At least half of the provisions of the contract must be ratified (2 marks)
Dear Mike, the correct answer is option 3. However, somewhere else i learned that the Principal may not need to be present when contract was made. Infact it was also stated that the third party may not need to know who is the principal. It looks contradictory while comparing with the options given above. Can you help me clearing this confusion. Please
The first 2 options are clearly against the concept – you cannot act for someone that lacks contractual capacity either because they don’t exist or because they are excluded from capable persons
The last option looks like a joke! A filler in order to give you four options
Think about option 3. A person, without authority, acts and pretends that they are acting on your behalf. You find out. What are your options? Tell the third party you’ve never heard of this purported agent? Ignore all correspondence fron quasi-agent and from third party? Or decide ‘This isn’t a bad deal that this unauthorised person has done on my behalf. I think I’ll go along with it’ But clearly, either the third party is going to ask you to deliver the appropriate goods or will, alternatively, deliver those goods to you
What a shock! So you contact third party and say ‘Whoever this guy is, I don’t know him and he had no authority. But I’m going to go ahead and ratify his actions’
At some stage, you would find that you had to communicate with third party that you wished to ratify