In what circumstances ratification cannot be done?
Ratification is not allowed in the below two scenarios.
- When it causes damage to the third party.
- When it is not an agency.
The first scenario was described yesterday. The second scenario is rare, however should be stated here. Ratification is about accepting the varied terms after an agent has carried out the deal with the third party. However, when the agent gave the impression that it is his own house, and not acting as an agent, there is no agency agreement in this context. With the rampant broker issue in the industry, this can be a case.
You saw an agent (who said it is his house) who negotiated and sold his bungalow (as if he owns it). You offer to buy from him RM550k. You paid the booking fee to him at RM10,000. Then, he goes back to his principal (who does not agree to sell). What happen next?
There is no ratification because the house is perceived to be the agent’s property. There cannot be any ratification. S.185 CA50 has the law which governs this scenario.
S.185 Performance of contract with agent supposed to be principal.
Where one man makes a contract with another, neither knowing nor having reasonable ground to suspect that the other is an agent, the principal, if he requires the performance of the contract, can only obtain the performance subject to the rights and obligations subsisting between the agent and the other party to the contract.