Sections 196 and 197 of the Indian Contract Act, 1872: Ratification of Unauthorized Acts

Sections 196 and 197 form part of the law of agency under the Indian Contract Act, 1872. They explain what happens when a person acts on behalf of another without prior knowledge or authority, and how the person on whose behalf the act was done may later adopt, or ratify, that act.

The Indian Contract Act, 1872 is Central Act No. 9 of 1872. The Act was enacted on 25 April 1872 and came into force on 1 September 1872. Sections 196 to 200 specifically deal with ratification in agency.

What is ratification?

Ratification means the subsequent adoption or confirmation by a person of an act that another person purported to do on his or her behalf without prior authority. Under Section 196, the person concerned may choose either to ratify the unauthorized act or to disown it. If the act is ratified, it has the same legal effect as if it had originally been performed with authority.

Section 196 - Right of person as to acts done for him without his authority

Section 196: Where acts are done by one person on behalf of another, but without his knowledge or authority, the person on whose behalf they were done may elect to ratify or disown them. On ratification, the legal consequences follow as though the acts had been performed with his authority.

Meaning and effect of Section 196

The section deals with an act purportedly done for another person without prior authority. It gives that person an election: the act may be accepted by ratification or rejected by disowning it. Ratification therefore operates as a later approval of the previously unauthorized act.

The provision should be read with Sections 198, 199 and 200. Section 198 requires sufficient knowledge of the material facts for valid ratification; Section 199 concerns ratification of an unauthorized act forming part of a transaction; and Section 200 protects third persons from being prejudiced by ratification.

Section 197 - Ratification may be expressed or implied

Section 197: Ratification may be express, or it may be implied from the conduct of the person on whose behalf the act was done.

Express ratification

Express ratification occurs where the person clearly communicates approval or adoption of the unauthorized act. The approval may be conveyed in words or by another sufficiently explicit form of confirmation.

Implied ratification

Implied ratification is inferred from conduct. A person who, with the relevant knowledge, deals with the benefits or consequences of an unauthorized transaction in a manner consistent with adopting it may, depending on the facts, be treated as having ratified it.

Statutory illustrations to Section 197

  1. A, without authority, buys goods for B. B afterwards sells those goods to C on B's own account. B's conduct implies ratification of A's purchase.
  2. A, without B's authority, lends B's money to C. B afterwards accepts interest on that money from C. B's conduct implies ratification of the loan.

Key legal requirements for valid ratification

Sections 196 and 197 establish the basic rule, but valid ratification must be considered together with the connected provisions. In particular, the person ratifying should have the knowledge required by Section 198; an unauthorized act forming part of a transaction is governed by Section 199; and ratification cannot be used under Section 200 to injure a third person in the manner prohibited by that provision.

Practical point: Whether conduct amounts to implied ratification depends on the facts. Acceptance of a benefit, dealing with property acquired through the unauthorized act, or other conduct consistent with adoption may be relevant, but the connected statutory requirements must also be satisfied.

Difference between Sections 196 and 197

Section 196 creates the right to ratify or disown an unauthorized act and states the effect of ratification. Section 197 explains the manner in which ratification may occur: expressly or by implication from conduct.

Official legal source

For the current statutory text and Act details, refer to the Indian Contract Act, 1872 on India Code.

This article is a general explanation of the statutory provisions and is not a substitute for advice on the facts of a particular case.