What is "ratification" in agency law?

Ratification in agency law refers to the process by which a principal retroactively accepts the actions taken by an agent, even if those actions were outside the original scope of their authority. This concept is important because it allows the principal to validate an agent's actions after the fact, effectively giving the agent's actions legitimacy and binding the principal to those actions.

For instance, if an agent enters into a contract without the explicit authority to do so, the principal can choose to ratify the contract if they agree with its terms. This creates a binding agreement as if the agent had authority from the beginning. Ratification ensures that principals can still retain control over their business activities even when agents act beyond their authority.

The other options address different aspects of agency law, but they do not capture the essence of ratification. When an agent disobeys the principal, it is typically a breach of duty rather than a situation that involves ratification. The termination of an agent or dissolution of an agency relationship involves ending the relationship rather than validating prior actions. Understanding ratification is crucial for recognizing how principals can manage and accept the actions of their agents effectively.