BL – May 2022 – L1 – SA – Q12 – Agency Law

Define the principal’s action when accepting a contract made by an agent without prior authority.

Question

Where an agent acts without an authority of his principal but the principal accepts subsequently to be bound by the contract, the principal’s action is known as
A. Estoppel
B. Ratification
C. Recognition
D. Acceptance
E. Approval

Answer

Answer: B. Ratification

Explanation:
When a principal subsequently approves a contract made by an agent without prior authority, this act is known as ratification. By ratifying the contract, the principal becomes bound by the agent’s actions as if they had been authorized from the start. Therefore, B. Ratification is the correct answer.

Tags: Agency Law, Contract, Principal-Agent Relationship
Level: Level 1

Topic: Agency Law
Series: MAY 2022

Uploader: Kwame Aikins