Towards sustainable business relationships: ratification doctrine in the case of unauthorized agency

Abstract

Each contemporary economic system is based on the principle of work sharing in creation and distribution of goods and services, the legal reflection of which is the institution of agency. In business, unauthorised agency, i.e. cases when an agent acts without having authority or exceeding it, is particularly often. Though the principal usually is not legally bound by actions of such an unauthorised agent, but in fact legal acts of each country provide for exceptions from this rule. One of them is the ratification doctrine, which means that the principal can ratify the agent’s unauthorised actions. This article analyses, by applying the comparative method, in what cases and under what procedure the ratification rule can be applied and what legal consequences it creates. A conclusion is made that the ratification doctrine is an efficient means of implementation of interests and defence of infringed rights not only of the principal, but also of other persons involved in the agency relationship, which should not be subject to any form requirements, especially in business relationships.