164 Chapter 6Agency
apparent authority then neither Phil nor Tim could enforce the contract. On Tuesday Phil
ratifies the contract. This ratification has retrospective effect and gives Alex actual authority,
backdated to the time when he made the contract on Monday. So Phil could enforce the
contract against Tim, Tim could enforce the contract against Phil, and Alex would have no
liability as he acted with actual authority.Four conditions must be satisfied for a ratification to be effective:
(i) The agent must have claimed to have acted as an agent, and the third party must have
been able to work out who the principal was.(ii) The principal must have had full contractual capacity to make the contract both when
the agent made the contract and when it was ratified.
(iii) At the time of ratification the principal must have either known all of the material facts
or intended to ratify no matter what they were.
(iv) A void contract cannot be ratified.
Ratification must take place within a reasonable time, and will have backdated effect. It will
not be allowed where third parties have acquired property rights which would be adversely
affected by ratification. A principal can ratify expressly (by saying that he does so) or by some
emphatic act (such as suing on the contract) which shows that he is confirming the contract.Watteau vFenwick authority
The following, difficult, case does not fit within any of the established ways in which agency
can be created. However, authority was found to have existed.Keighley Maxted & Co vDurant (1901) (House of Lords)An agent was authorised to buy wheat on behalf of a principal at a certain price. The agent
bought wheat at a greater price, by telegram, intending it to be for the principal. The agent
did not tell the seller that he was buying the wheat for the principal, but this was always his
intention. The principal ratified the contract the following day. Later the principal refused to
accept delivery of the wheat.
HeldThe ratification was not effective, and so the principal could refuse to accept delivery,
because the agent made the contract in his own name rather than in the principal’s name. The
seller could not have worked out that the wheat was intended to be bought for the principal.Watteau vFenwick (1893)A pub owner let a manager (the agent) run a pub. The owner authorised the manager to buy
only bottled drinks and expressly forbade him to buy tobacco on credit. Acting against
these instructions, the manager did buy tobacco on credit. The tobacco salesman had no