With ratification, we have an agency appointment “after the fact”.
Let’s look at an example of this situation.
Agent Bob is a great site assembler. He gets four people to agree to sell. He needs the fifth which is in the middle to put it altogether.
He submits an Offer, “Bob in trust for a corporation to be incorporated”.
The Offer is accepted.
There is no corporation.
Bob then incorporates the company.
The company THEN ratifies the agency appointment with Bob, elects to take the benefit of the agreement, and thereby confirms that at all times Bob was its agent.
This is the case with ratification, even though the corporation didn’t even exist at the time Bob did the deal.
Ratification: Seller’s Agent
It’s more difficult to come up with a proper Seller’s example, but the perfect example crossed my desk this week.
A Condominium developer is conducting pre-sales at the Sales Centre.
In house agents are paid $500.00, while those outside agents who bring a buyer are paid a percentage, usually being at least $5,000.00.
Bob had a couple of clients and made some money as an outside agent. So, he then attended the Sales Centre on the weekend. He pretended to be part of the developer’s sales staff. In fact, he provided some of the sales staff with $500.00 in cash if they looked the other way.
The deception, of course, was directed to the developer. The potential buyers attended at the sales pavilion believing that they were dealing directly with the developer’s own staff. The advertising which got them to the site was paid for by the developer.
Bob intervenes and scoops the potential buyer.
However in putting the Offer together Bob mistakenly includes rather than excludes parking, which was worth about $30,000.00.
The Developer accepts the Offer and signs the documents believing that no one on his sales staff could make such an error.
The Developer THEN ratifies the agency appointment with Bob, elects to take the benefit of the agreement, and thereby confirms that at all times Bob was its agent.
Bob’s mistake was the Developer’s mistake.
This is the case with ratification, even though the agency appointment didn’t even exist at the time Bob did the deal. INTERESTING!
Brian Madigan LL.B., Broker