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Ratification

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › Ratification

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • February 14, 2023 at 11:04 am #678870
    krrish2005
    Participant
    • Topics: 138
    • Replies: 229
    • ☆☆☆

    Sir kaplan text states that among other conditions
    For Ratification the principal must be identified when the cotract is made by agent

    Is it right sir

    February 14, 2023 at 1:42 pm #678876
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23303
    • ☆☆☆☆☆

    That’s an interesting one! For ratification to be available three pre-requisites must be apparent:

    the agent must purport to act on behalf of a principal

    the principal must exist at the time of the contract, and

    the principal must have capacity

    Because the agent must claim to be acting on behalf of a principal, ratification is only available where a principal is stated to exist but need not be disclosed. The third party must know that there is (or is claimed to be) a principal in the background. Otherwise, if the third party believes that the agent is acting on their own account, it would not be possible for an undisclosed principal later to ratify. If the principal is not disclosed, the third party can elect either the agent or the principal as bound under the contract terms.

    Is that any clearer?

    February 14, 2023 at 2:05 pm #678878
    krrish2005
    Participant
    • Topics: 138
    • Replies: 229
    • ☆☆☆

    Sir can it happen that an agent do not disclose himself to third party that he is acting in capacity of an agent and enter into a contract
    But when that undisclosed principal is identified by 3rd party, he can elect
    So principal can still ratify the contract if 3rd party allows by electing him to be liable

    February 14, 2023 at 3:42 pm #678885
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23303
    • ☆☆☆☆☆

    That’s how I understand it, yes

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