The creation of an agency relationship when a principal adopts the act of someone who acted as if authorized but had no power or authority.

• A. Agency by estoppel
• B. Power of attorney
• C. Ratification
• D. Actual authority

Answer: (C)

Ratification creates an agency when a principal approves or adopts an act performed by someone who appeared to act for the principal but had no actual authority. By accepting the act—whether outright or through conduct that signals approval—the principal makes the transaction binding as if authority existed from the start. For ratification, the principal must knowingly affirm the transaction and it must be within the scope of what could have been authorized. Once ratified, the principal is bound and the agent’s acts are treated as authorized.

In this scenario, someone acted as if they had authority, but they did not. When the principal later adopts the act, that acceptance retroactively creates the agency relationship. This distinguishes ratification from agency by estoppel (which depends on the principal’s representations leading a third party to believe there is authority), and from a power of attorney (a formal grant of authority) or actual authority (authority given before the act).