What happens during ratification in an agency relationship?

In an agency relationship, ratification occurs when the principal accepts actions taken by the agent that were not authorized at the time those actions were performed. This acceptance retroactively validates the actions of the agent, making them binding on the principal as if they had originally authorized them.

This is significant because it allows the principal to benefit from favorable actions taken by the agent, even if they were outside the scope of the agent's initial authority. It also helps to maintain the integrity and effectiveness of the agency relationship, acknowledging that the actions taken can align with the principal's interests after the fact.

Other options do not accurately describe ratification. Rejection of the agent's actions pertains to the opposite of ratification, while losing authority and termination of the agency relationship suggest a breakdown or discontinuation of the relationship rather than a validation of actions. Thus, the correct choice emphasizes the acceptance aspect of ratification, illustrating how it empowers the principal to embrace previously unauthorized actions.