CMA Intermediate · Business Laws and Ethics · Special Contracts - Indemnity and Guarantee; Bailment and Pledge; Laws of Agency
Karan, a Chennai merchant, appointed Latha as agent to sell goods. In a situation where Latha's authority was lacking, Karan purported to ratify her unauthorised sale. Which of the following would make that ratification ineffective under the Indian Contract Act, 1872?
Partial ratification makes it ineffective. Ratification must cover the whole of the unauthorised act, so a principal cannot adopt the profitable part and reject the remainder. Conduct, full knowledge and the agent having acted on the principal's behalf are consistent with valid ratification.
- AKaran ratified only a part of the transaction, accepting the profitable portion and rejecting the restCorrect
- BKaran ratified the sale by conduct instead of in words
- CKaran ratified the act with full knowledge of the facts
- DLatha had professed to act on behalf of Karan when making the sale
Explanation
Ratification must be of the whole transaction; a principal cannot accept the beneficial part and reject the rest. Ratification may be express or implied by conduct, needs full knowledge of facts, and requires the agent to have acted on behalf of the person ratifying. Options B to D are conditions or modes that support valid ratification.
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