ACCA Applied Skills · Corporate and Business Law (Global) · Agency law
Lena, without authority, signs a contract with Brightway Ltd, saying she acts for Marco, an identified businessman. Marco learns of it two weeks later. Brightway has not withdrawn. Which condition would prevent Marco from validly ratifying?
Ratification would fail if Marco adopted without knowing the material facts. He must adopt the whole contract with full knowledge, within a reasonable time. Adoption by conduct is enough, and prompt adoption helps rather than hinders ratification.
- AMarco has no knowledge of all material facts when he adopts the contractCorrect
- BMarco adopts the contract by conduct rather than in writing
- CMarco adopts the contract within a reasonable time
Explanation
Valid ratification needs the principal to have existed and been identified at the time, the act to be lawful and within the principal's capacity, and adoption of the whole contract within a reasonable time with knowledge of the material facts. Adoption by conduct is sufficient, and prompt adoption is acceptable, so only lack of knowledge defeats it.
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