Question

Where a person having no authority purports to act as agent, or a duly appointed agent exceeds his authority, the principal is not bound by the contract supposedly based on his behalf. But the principal may ratify the agents transaction and so accept liability. This known as ______.

• A. Agency of necessity
• B. Agency by operation of law
• C. Agency by holding out
• D. Agency by ratification

Answer 1

The correct option is D Agency by ratification

Section 196 of the Indian Contract Act provides that an agency can be created by ratification. It says that when an act is done by one person on behalf of another without his knowledge or authority, the person on whose behalf such act is done may ratify the act. In case the act is ratified an agency by ratification comes into existence. The agency created by ratification is also called as an 'ex post facto agency'.