An agency relationship created when a principal approves and accepts an unauthorized act performed on their behalf.
Why Agency by Ratification matters on the exam
This term belongs to Agency. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Agency by Ratification
Every Freehold question shows why the right answer is right — and cites its source.
An agency relationship created by the words and conduct of the parties, rather than a written or spoken agreement, is called:
Express agency
Implied agency
Agency by ratification
Agency coupled with an interest
Show answer & explanation
Implied agency — Implied agency arises from the parties' actions and conduct rather than an explicit agreement. Licensees must be careful, because acting like someone's agent can unintentionally create agency duties.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
How does agency by estoppel differ from agency by ratification?
Estoppel requires a signed writing between the parties, while ratification may be established by the principal's subsequent conduct alone
Ratification can only be used to terminate an existing agency relationship, while estoppel can only be used to create an entirely new relationship between the principal and a third party who dealt with the agent
Estoppel protects a third party who reasonably relied on the principal's own conduct, while ratification requires the principal to affirmatively approve a specific unauthorized act after it occurred
There is no meaningful legal difference between the two, since both arise from the principal's later approval of the agent's act
Show answer & explanation
Estoppel protects a third party who reasonably relied on the principal's own conduct, while ratification requires the principal to affirmatively approve a specific unauthorized act after it occurred — Estoppel focuses on protecting third-party reliance caused by the principal's own conduct, whereas ratification requires the principal to knowingly approve a specific unauthorized act that already took place.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
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