Creation of an agency relationship resulting when a principal adopts the act of another who has purported to act for the principal and has neither power nor authority to perform the act for the principal.

• A. Ratification
• B. Agency
• C. Power of attorney
• D. Apparent authority

Answer: (A)

Ratification creates an agency relationship when a principal adopts the acts of someone who purported to act for the principal but had no power or authority to do so. If a person acts as if they have authority to bind the principal, the principal can later approve or adopt those acts. Once ratified, the agency relationship is treated as if it had existed from the beginning, and the principal becomes bound to the third party under those acts. The ratification must be a clear indication of assent, either expressly or by accepting the benefits or obligations of the act. The act ratified must be something the principal could have authorized.

This differs from apparent authority, which arises from the principal’s conduct that leads a third party to reasonably believe the agent has authority; the agency is not created retroactively by ratification in that case. It also differs from a power of attorney, which is a document that grants authority upfront; it doesn’t describe creating agency after the fact through adoption.