Ratification an agent can also have retroactive after

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Business Law Today, The Essentials: Text and Summarized Cases
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Chapter 18 / Exercise 02
Business Law Today, The Essentials: Text and Summarized Cases
Miller
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Ratification An agent can also have retroactive (after the fact) power to bind through ratification A retroactive source of the agent’s authority occurring when the principal affirms a previously unauthorized act by either (1) expressly ratifying the transactions, or (2) not repudiating the act via retaining the benefits while knowing that the benefits resulted from an unauthorized act by the agent. . Ratification occurs when the principal affirms a previously unauthorized act. That is, even though the agent did not have the authority to bind the principal initially, the principal may subsequently give after-the-fact authority by either (1) expressly ratifying the transactions, or (2) not repudiating the act by retaining the benefits while knowing that the benefits resulted from an unauthorized act by the agent. For example, suppose that Manager is the general manager of an apartment complex and is the agent of Owner. After a series of burglaries, Manager hires InstallCo. to install an expensive burglar alarm system in the
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Business Law Today, The Essentials: Text and Summarized Cases
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Chapter 18 / Exercise 02
Business Law Today, The Essentials: Text and Summarized Cases
Miller
Expert Verified
complex. InstallCo. has never done business with Manager previously, but allowed him to sign an alarm services contract as Owner's agent. During the week-long installation, Owner notices the workers on the site and asks Manager to fill him in on the details. It is at this point where the authority is either ratified or disclaimed. Owner never expressly gave Manager authority to contract with InstallCo. and, given the expense, nature of the contract, and a lack of past dealing, it is unlikely that any implied or apparent authority exists. Nonetheless, Owner may be pleased with the Manager's decision and ratify (affirm) the transaction. Owner also ratifies the transaction if he does nothingto disaffirm the transaction (such as stopping InstallCo. from continuing work), because Owner is still reaping the benefits of what he knows to have been an unauthorized transaction. Thus, if Owner learns of the transaction, says nothing, and receives the benefits, he may not now refuse to honor the contract on the basis that Manager lacked the agency power to bind Owner to a contract with InstallCo. p. 251 CASE 10.2 Hannington v. University of Pennsylvania , 809 A.2d 406 (Pa. Super. 2002) FACT SUMMARY Hannington, a graduate student at the University of Pennsylvania (Penn), brought suit against the university for breach of contract. Attorneys for both sides appeared to have reached a settlement when, just prior to trial, Hannington's attorney notified the court that a settlement had been reached and sent Penn a final draft of the settlement agreement. Penn agreed to the settlement terms and sent the settlement agreement back to Hannington's attorney with Penn's authorized signatures. However, Hannington refused to sign the settlement agreement, hired a new attorney, and opted to proceed to trial. The trial court refused to allow Hannington's case to go forward and held that Hannington's attorney had apparent authority to settle the case and Penn had reasonably relied on Hannington's attorney as being an agent authorized to settle the case. Hannington appealed.

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