Key Takeaways

  • Ratification makes a previously unauthorized or voidable contract legally binding.
  • It can occur expressly (written or verbal agreement) or impliedly (through conduct).
  • Only contracts that are voidable—not void—can be ratified.
  • A ratification agreement must include clear consent, signatures, and usually a copy of the original contract.
  • Corporate ratification may require board approval, depending on the organization's structure.

To ratify a contract simply means that one or more parties wants to move forward with a contract even if the clauses in the contract state you do not have to do so. If you want to enforce a contract made with a person who did not have the right to get into a contract but did so on behalf of the business, knowing how to ratify a contract is crucial for any business owner.

Legal Issue of Ratification of a Contract

A contract ratification is needed if a contract is voidable but all parties determine that they would like to execute and do the contract anyway. As a business owner, you may have to ratify contracts signed by those who did not provide a signature.

When Is Ratification Necessary?

Ratification is typically necessary when a contract was entered into by someone lacking proper authority or when a contract is legally voidable. Common scenarios include:

  • A minor entering a contract and later reaching the age of majority.
  • An agent acting without authority, with the principal later choosing to approve the act.
  • Clerical errors or omissions in the signing process.

In these cases, ratification allows the contract to remain valid and enforceable once affirmed by the appropriate party.

Contract Formation

A contract includes an offer, acceptance, consideration, and a meeting of the minds. This means that you make sure everyone understands and agrees to the contract terms.

Consideration refers to the act of the parties exchanging something of value during contract creation. If there are issues in the creation in the terms, the contract could be voided. A written contract signed by those who are authorized to bind the corporation is an example of ratification.

A contract describes the obligations and rights in the arrangement and lets a party get legal help if the contract is reached. In some cases, the agreement can be changed. The parties can then amend their agreement to show the change.

Legal Definition of Ratify

So, what does ratify mean? Legally, “ratify” refers to the act of formally approving or confirming a previous agreement, decision, or act. In the context of contracts, it transforms a non-binding or unauthorized agreement into one that is legally enforceable. Once ratified, the party is bound by the contract terms as if they had initially agreed to them with full authority.

Contract Flaws

Contracts that were voided may not be ratified because they cannot be executed legally. This can include contracts that were made involving anything illegal, those for performance of events that are impossible, and those who restrain someone’s choice of who to marry.

Contracts that are voidable otherwise, but not void, could be performed through ratification. This can include contracts where a party is incapacitated when the contract was signed due to alcohol use.

Void vs. Voidable Contracts

Understanding the difference between void and voidable contracts is crucial. A void contract is invalid from the outset and cannot be ratified—such as agreements involving illegal activities or contracts that violate public policy. In contrast, a voidable contract is initially valid but may be rejected by one party due to factors like misrepresentation, duress, or incapacity. Only voidable contracts can be ratified once the issue is resolved.

Ratification

When a person communicates with another person, either in words or by actions, the person accepts and approves of the conduct. Ratifications are either express or implied.

Express are made in the express and direct terms of assent. Implied are those that presume from the actions of the principal. The principal is allowed to choose if he will nor will not adopt any unauthorized acts. Once the act is ratified, it cannot be revoked if everyone is clear on the circumstances.

The ratification can be retrospective and binds the principal. It has to be voluntary, and the party has to know that he or she would not be bound without it.

Ratification Agreement

A ratification agreement has to state that every party wants to ratify the contract. A copy of the contract has to be attached. It needs to include the date of the ratification and any clauses necessary. This includes how the notice will be provided in the agreement. The agreement has to be signed by all parties.

Steps in the Ratification Process

Ratifying a contract involves a few key steps:

  1. Review the Contract: Ensure the terms are understood and acceptable.
  2. Confirm Authority: The party ratifying must have the legal authority to do so.
  3. Express or Implied Ratification: Ratification may be communicated in writing or inferred from conduct (e.g., continuing to perform under the contract).
  4. Document the Ratification: Draft a ratification agreement that outlines the intent to be bound, includes signatures, and attaches the original contract.
  5. Notify All Parties: Ensure all parties receive formal notice of the ratification.

Once these steps are completed, the contract becomes binding retroactively to the original signing date.

Vicarious Liability

Vicarious liability happens when the ratification is not necessarily needed to hold the business liable for some conduct. Businesses are responsible for their employees’ actions unless the action is done outside his or her employment.

Business Decisions of the Board

In some cases, there needs to be more than one person to ratify a contract. A corporation uses a board of directors, each of whom are chosen by shareholders. For an action to be valid, the bulk of the board has to vote to approve the action. If the board does not authorize an action, it can avoid liability.

How to Ratify a Contract

If an employee signs a contract for your business, the other party could want you to ratify it by showing you accept the terms. If you have the grounds to void the contract, ratifying demonstrates that you want it to continue anyway as is. You do have the option to refuse ratification.

The following are items to consider when entering into an agreement:

  1. Look over the agreement and make sure you understand the terms and conditions. If you ratify one part of the contract, you have to ratify the entire agreement.
  2. Make an express or implied declaration that you accept the terms.
  3. Continue honoring the terms of the contract as normal.

Consequences of Ratifying a Contract

Ratifying a contract has several legal implications:

  • Binding Commitment: The party becomes legally bound to all contract terms.
  • No Further Revocation: Once ratified, the contract cannot be voided based on the original defect.
  • Legal Remedies Apply: Either party may now seek enforcement or damages if the other breaches the contract.
  • Potential Liability: In some cases, ratifying a contract signed without authority may expose the business to unforeseen obligations or risks.

Therefore, it’s important to consult legal counsel before ratifying any questionable agreement.

Frequently Asked Questions

1. What does ratify mean in simple terms?It means to officially approve or confirm something, like an agreement, to make it valid.

2. Can a contract be ratified if it’s void?No. Only voidable contracts can be ratified. Void contracts are invalid from the beginning and cannot be enforced.

3. How do you ratify a contract?By expressing approval verbally, in writing, or through conduct, and often by signing a ratification agreement.

4. Who can ratify a contract?Only the party with proper authority—such as the business owner, corporate officer, or legal guardian—can ratify a contract.

5. Is ratification always necessary?No, it’s only required when a contract was entered into without authority or was voidable due to legal defects.

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