What does ratification refer to in the agent-principal relationship?

Ratification in the agent-principal relationship refers to an affirmation of authority after the fact. When an agent acts on behalf of a principal, any actions taken may or may not be within the scope of the authority granted by the principal. If the principal, upon learning of the agent's actions, decides to approve or affirm those actions retroactively, this is termed ratification. It serves to validate the agent's actions, establishing them as legitimate even if they were initially unauthorized.

This concept is vital as it allows the principal to accept the benefits of the agent’s actions, even if those actions were performed without explicit prior permission. Ratification can occur in various forms, such as through written or verbal consent, and it reinforces the relationship's fluidity by allowing principals to accept actions that benefit them, ensuring that the principal will be bound by the agent's actions.

In contrast, rejecting the agent's actions indicates disapproval rather than validation. The requirement for written approval is not a necessary condition for ratification; parties may ratify actions informally. Lastly, a limit on the agent's authority does not capture the essence of ratification, as ratification specifically deals with validating actions rather than restricting them.