Case Analysis Report

Submitted to
School of Law
Auro University

As a Course Work for continuous evaluation in the subject of

Contract 2[Law108]

Semester III
[2013- 2018]

UNDER THE GUIDANCE OF

Prof. Shilpi Sharma

School of Law
Auro University

Report by
Anshul Shah
Jay Desai
Samyak Vora

Bolton Partners
VS
Lambart
(1889) 41 Ch D 295

Introduction To Ratification
Ratification is a principal's approval of an act of its agent where the agent
lacked authority to legally bind the principal.The term applies to private
contract law, international treaties, and constitutions in federations such as
the United States and Canada.
Agency By Ratification
Subsequent adoption of an activity is called ratification. Soon after ratification,
the person who has done the activity becomes agent and that person who has
given ratification becomes principal.
Ratification is of two types.
Express Ratification
Implied Ratification.
The ratification where there is wording and expression is called express
ratification. For example: Without A`s direction, B has purchased goods for the
sake of A from C. There after, A has given his Support to B`s activity, it is
called ratification and now A is principal and b is agent.
The ratification where there is no expression is called implied ratification. Here
the mode of behavior of the party indicates that support is given to activity
concern. For example: Mr. Q has P`s money with him. Without P`s direction Q
has lent that amount to R. Thereafter, R pays interest directly to P and P has
taken the amount of interest. It indicates that P has given his support to Q`s
activity.

 Essentials of Valid Ratification:

1.The person, who is going to give ratification, must be in existence at the time
of activity. Let us consider pre-incorporation contracts made by promoters.
Company comes into existence on the date of incorporation. Therefore company
is not in existence at the time of pre-incorporation contracts. If company gives
ratification to pre incorporation contracts, it is not valid ratification. Hence to
pre-incorporation contracts, promoters are personally liable.
2.The person who is going to give ratification should have capacity to contract,
at the time of activity as well as at the time of ratification. In Armugan Vs Dorai
Singh the minor obtains loan from money lender and executes a deed. Before
repayment of debt, he becomes a major and executes another bond. Court
decides that the second bond also is not valid because the person who has
given ratification has no capacity to contract at the time of activity i.e. at the
time of getting loan.
3.Ratification should be given within reasonable period after the activity the
concept of reasonable period depends upon nature of the situation.
4.Ratification must be absolute. To entire activity ratification is to be given.
Partial ratification carries no validity.
5.The fact of ratification must be communicated to all parties in connection
with the activity.
6.Ratification attains validity only when it is given with full knowledge of facts
relating to the activity.
7.The activity which is going to be ratified must be a lawful activity. For
example: for the sake of A, B has murdered C. If A gives his support to B`s
activity, it is not valid ratification.

8.The person who is going to give ratification should have right to do such
activities. For example: If company gives ratification to an Ultravires activity it
is not valid.
9.Ratification relates back to date of activity. Though ratification takes place
after the date of activity, it will be assumed that ratification is given on the date
of activity.
10.Ratification should not lead to breach of contract. In other words ratification
should not be harmful to third party. For example: There is a rental agreement
between A and B according to which three months notice is needed at the time
of vacation of house. On one day C, A`s son, has asked B to vacate the house
on that day itself. A has given his support to C`s activity. It is not valid
ratification because it leads to breach of rental agreement and at the same time
it is harmful to B.
FACTS:
An offer of purchase was made by the Defendant, A. J. Lambert, to P. A.
Scratchley, who was acting as an agent of the Plaintiffs, Bolton Partners
(Limited), but was not authorized to make any contract for sale on 8th of
December, 1886. The offer was accepted by Scratchley on 9th of December on
behalf of the Plaintiffs with a direction that the companys solicitor had been
instructed to prepare the necessary documents. On the 13th of January, 1887,
the defendant withdrew his offer on the ground that he had been misled by the
statements that had been made to him as to the value of the property. After the
withdrawal, the Plaintiffs, on 28th of January, ratified the acceptance of the
offer by S.

 ISSUES:
1. Whether there ever was a completed contract between the parties?
2. Whether the contract was obtained by misrepresentation on the part of
those seeking to enforce it?
3. Whether the ratification was ultr vires?

CONTENTIONS:
Defendant
1. There was no concluded contract but only negotiations. The letters relied
on amounted only to a conditional offer as formal documents were yet to
be prepared. Also, other terms were introduced by subsequent letters
and hence Hussey v. Horne-Payne is applicable.
2. If there is a contract, it was induced by the misrepresentations of the
companys agents.
3. After the Defendant had repudiated his offer it was too late for the
company to ratify Scratchleys acceptance and such ratification was ultra
vires.
Plaintiff
1. As soon as an offer has been accepted the contract is complete.
2. The ratification by the board of directors on the 28th of January, was
good, and related back to the date of the original contract; so that the
repudiation by the Defendant on the 13th of January, 1887, was of no
effect
3. There was no misrepresentation.

 HELD:
Court of 1st Instance (Kekewich, J.)
1. The two letters of the 8th and 13th of December contained a distinct offer
by the Defendant and acceptance by Mr. Scratchley on behalf of the
Plaintiffs and there was nothing in the previous or subsequent
negotiations to the contrary.
2. On the evidence, that there had been no misrepresentation on the part of
the Plaintiffs.
3. As per doctrine of ratification, the ratification would have retrospective
effect and hence it would not be ultra vires.
Court of Appeal(Cotton L.J.)
1. (w.r.t 1st contention of the defendant) Mere expression of an intention to
have further documents does not prevent there being a contract. There
was a binding contract constituted by the two letters alone. Hussey v.
Horne-Payne is not applicable as in that case it was not because the
subsequent letters raised a doubt, that it was held that the two original
letters did not form a completed agreement, but because the two original
letters of themselves contained terms which raised the doubt.
2. (w.r.t 2nd contention of the defendant) The rule of ratification is
applicable as per which ratification is thrown back to the date of the act
done, and that the agent is put in the same position as if he had had
authority to do the act at the time the act was done by him.
3. On the evidence, that there had been no misrepresentation on the part of
the Plaintiffs.
Lindley L. J. & Lopes, L.J.: They all concurred to Cotton L.J.s observation.

 LAW POINTS:
Retrospective Effect of Ratification
Ratification is thrown back to the date of the act done, and that the agent is
put in the same position as if he had had authority to do the act at the time the
act was done by him.

Exceptions to Ratification
(1) Where a vested estate is divested;
(2) Where there has been forgery;
(3) Where the ratification is after the time when the act could be done.
Criticism

1. Gives an inappropriately full effect to the doctrine of relation back

2. The third party is in the power of the principal, not merely as to whether he
had made a contract, but also as to whether he must already answer for
breach of it.
3. When the third party discovers before any ratification that the agent is
unauthorized, he should be able to escape from the transaction rather than
have to wait, if only for a reasonable time, to see if he has a contract.
4. Only restricted to cases of lack of authority. If the original agreement is
ineffective for any other reason (like, lack of deed), there is no contract to
withdraw from and doctrine of relation back does not apply.
The rule of ratification unduly favours the principal because till ratification he
was not bound, and he had an option to adopt or not to adopt what had been
done.
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