Business Contracts

Article 1998 of the Civil Code stipulates that the principal can only be held liable for acts carried out by the agent beyond the scope of his agency agreement, insofar as he has expressly or tacitly ratified them. Article 1156 further provides that “the invalidity or unenforceability of an act [implemented in the absence of authority or in excess of the agent's powers] may no longer be invoked on …

Ratification

Article 1998 of the Civil Code stipulates that the principal can only be held liable for acts carried out by the agent beyond the scope of his agency agreement, insofar as he has expressly or tacitly ratified them. Article 1156 further provides that “the invalidity or unenforceability of an act [implemented in the absence of authority or in excess of the agent's powers] may no longer be invoked once the principal has ratified it”.  

The scope of ratification is broad. According to case law, any irregularities affecting a party's agency agreement, whether due to invalidity of the agency agreement, exceeding the authority granted or lack of authority, may be ratified by the principal . Moreover, ratification by the principal is possible even when the agent who has exceeded his agency agreement has declared that he or she is acting in his or her own name. For example, a contract concluded by an author's publishing house may be ratified by the author/principal, even if the author/principal has contracted with another publisher, both in his own name and in the name of the undertaking, having received an agency agreement only to regulate the terms and conditions of the republication of his work . 

The principal's intention to ratify the irregular act must be manifested by a positive and unequivocal act . The assessment of the facts and circumstances revealing ratification by the principal of the acts performed by the agent is a matter for the courts to decide . Thus, according to the courts, a heated discussion between the seller and his agent, to the point of prompting the police to intervene, and the latter's refusal to return the keys to the vehicle, rule out any ratification by the principal of the auction of the vehicle below its reserve price . Similarly, there can be no ratification of a share subscription when the letters sent by the principals to their agent show that at no time did they express their wish to ratify an act about which they had always expressed doubts, or even opposition .  On the other hand, a court of appeal cannot exclude the existence of ratification and hold that a letter of dismissal, which does not specify the identity of the person who signed it, is vitiated by material irregularities which deprive the dismissal of any real and serious cause in that it does not make it possible to verify that said person works within the undertaking and had received authority to do so from the employer, even though the letter had been signed to order on behalf of the Human Resources Director and the dismissal procedure completed, thus ratifying the agency agreement to sign the letter of dismissal .

By contrast, according to the courts, tacit ratification occurs when the principal neither disavows his agent, nor contests his actions . In the exercise of its sovereign power, a court of appeal was thus able to deduce from the existence of personal ties between the interested party and her husband, the manager, and her children, partners in the undertaking which leased the property she owned, that she shared a common interest with them, as well as her excellent knowledge of the situation, revealed both by the tax returns and by the location of the undertaking at the same address as the spouses' home, that, given her silence for over two years, the wife intended to ratify the commercial lease, granted by her husband, on her own property . Tacit ratification may also result from the voluntary performance of the contract by the party who was illegally represented . This is the case when the borrowers, in whose name and on whose behalf the disputed loan had been concluded in authenticated form, having received the funds, took possession of the property for the financing of which they were allocated without disputing the acquisition of this property, benefited from the tax advantages, received the rents, and began to repay the loan taken out . 

Ratification is not subject to the conditions required for confirmation of a void deed . Accordingly, a court of appeal cannot declare an order for seizure and sale null and void and order its release on the grounds that the loan deed had been marked by a notary's secretary lacking any authority, that the lack of representation of one of the parties constitutes an irregularity of form such as to deprive the notarial deed of its status as a writ of execution, and that, although the borrowers received the funds and repaid the loan over a period of several years, their ratification of the disputed agency agreement has not been established, since it has not been proved that they were aware of the defect in the deed and intended to rectify it .

Ratification by the principal of an act contracted on his behalf by the agent has the effect of binding him to his co-contracting party. A commitment entered into by a partner on behalf of a limited liability company in formation, which has been ratified by an agency agreement drawn up subsequently but given by the partners before the company was registered, entails the assumption of these commitments by the company . Conversely, the liability of a third-party co-contractor can no longer be asserted by the principal, once the latter has adopted the act concluded by his agent. Thus, the liability of the bank holding the account on which transactions are carried out without power of attorney by the proprietor's spouse is not committed if the proprietor has ratified them, even tacitly, in accordance with the rules of agency .

Ratification by the principal of the act performed by the agent is retroactive to the date of the ratified act . In other words, once the existence of a power of attorney has been acknowledged, whatever the date, the act performed by the agent is retroactively ratified . Accordingly, the trial courts are not required to determine whether or not the acts of performance of the agency agreement predate the power of attorney . A court of appeal cannot therefore hold that a certificate drawn up after the sale by a wife, in which she states that she has given her husband full powers to sell their joint property, does not establish that on the date of the deed, the husband was mandated by his wife . On the other hand, a court of appeal cannot accept that the ratification of a sale following the payment of an invoice by the principal is tantamount to ratification of sales subsequently implemented by the agent, on the grounds that ratification by the principal would be assessed in relation to the agency agreement, and not in relation to each of the sales carried out under it, whereas the absence of signature of a real estate sales agency agreement entails invalidity, which can only be covered by subsequent ratification of acts carried out without an agency agreement  .

CA Saint-Denis de la Réunion, 28 April 2023, LawLex202300008846JBJ.

Cass. 1re civ, 28 April 1980, LawLex202300002332JBJ.

Cass. 1re civ., 2 July 2014, LawLex202300008264JBJ. See, e.g., Cass. 1re civ. 15 October 2014, LawLex202200008839JBJ, holding that the plaintiffs could not sue for invalidity for lack of authority of the person representing them in the notarial deed, since they had received the funds, taken possession of the property, benefited from the tax advantages, collected the rents and started repaying the loan, and had therefore ratified the disputed agency agreement and loan agreement.

Cass. 1re civ, 2 July 2014, LawLex202300008264JBJ; 9 July 2015, LawLex202300008057JBJ; 17 December 2015, LawLex202300008226JBJ. See also CA Saint-Denis de la Réunion, 28 April 2023, LawLex202300008846JBJ.

Cass. 1re civ, 17 December 2015, LawLex202300008226JBJ.

Cass. com. 1 July 2008, LawLex202200003798JBJ. However, Cass. com, 6 December 2005, LawLex202100003184JBJ, finding that, since the acceptance of commitments entered into in the name of a company in formation can only result either from the signature by the partners of the articles of association, to which are appended a statement of actions carried out on behalf of the undertaking, an agency agreement given by the partners prior to the company's registration, to one or more of the partners, or to the managing director who is not a partner, setting out the commitments to be made, or, after registration, a decision taken by a majority of the partners, a court of appeal, to decide that the registration of the lessee had validly entailed the resumption of the lease, entered into in his name prior to his registration, cannot hold, on the one hand, that all the partners having contributed to the conclusion of the lease, this commitment must be deemed to have been entered into by virtue of an agency agreement given by the future partners, on the other, that it is not necessary to complete such a formality if all the future partners had expressly given their agreement to the commitment by ratifying it.

Cass. com, 17 November 2015, LawLex202300008557JBJ, noting that the husband, who, claiming to have discovered the existence of debit transactions carried out in particular by his wife, without power of attorney, from his savings account, served summons on the bank for restitution of the corresponding funds and payment of damages, had, according to the Court of Appeal, tacitly ratified all the disputed transactions, including the two for which the originator could not be identified with certainty, since by signing the agreement to open his account, he acknowledged that he was aware that the bank would be sending him a monthly statement, that he himself then carried out numerous transactions on the account, and that the disputed transactions, far from being isolated or limited in time, consisted of thirty withdrawals or transfers and the issue of a cashier's cheque spread over more than a year, that the sums withdrawn were paid into joint accounts or into those of his undertaking, and that the transactions were not the subject of any complaint on his part until two years after the first transfers had been made.

Cass. 3e civ, 20 December 1971, LawLex202200009653JBJ.- However see Cass. com.., 29 June 1993, LawLex202200006444JBJ, holding that a court of appeal may note that the reservations expressed by the manager at the general meeting of the undertaking, which concerned the validity of the power of attorney given by one partner to another, were lifted by a subsequent letter in which the principal ratified all the decisions taken by his agent at the end of the meeting, and in particular that of dismissing the manager, without giving retroactive effect to the disputed dismissal.

Cass. 1re civ, 4 December 1979, LawLex202200010335JBJ.

Cass. 1re civ, 25 March 1981, LawLex202300013719JBJ.

Cass. 3e civ, 8 July 1987, LawLex202300013720JBJ.

Cass. 1re civ. 19 January 2022, LawLex202200008645JBJ.

Cass. 3e civ, 11 January 1995, LawLex202300013713JBJ.

Cass. 1st civ. 6 February 1996, LawLex202200008525JBJ. 

Cass. 3e civ, 25 June 1996, LawLex202300013716JBJ.

Cass. 1re civ, 6 February 1996, LawLex202200008525JBJ.

Cass. soc. 10 November 2009, LawLex202200007130JBJ. Cf. CA Paris, 8 September 2022, LawLex202300008326JBJ, holding that, even if, according to article 1998 of the Civil Code, express or tacit ratification of the agency agreement is possible, in the event of the agent exceeding his or her authority, in the case of a redundancy occurring within an undertaking, no regularization is allowed, on the other hand, when the redundancy occurs within an association; and adding that the signature of an employee's letter of dismissal by an association's human resources director renders the redundancy devoid of any real and serious cause, in the absence of possible ratification, since the association's articles of association stipulate that its chair is its legal representative vis-à-vis third parties for all corporate acts, unless delegated, for a specific act, to another member of the supervisory and management board, in particular the vice-chairman, and it is not disputed that the human resources director is neither a member of the supervisory board nor vice-chairman of the association.

Cass. 3e civ.., 2 May 1978, LawLex202300013718JBJ, noting that, even if it was stipulated in the bilateral promise of sale that in the event of non-payment on the due date, the sale could be rescinded, if the seller so decided, and that the agent collected the entire sale price after the fixed term, during the fifteen years preceding his death, the seller neither disavowed his agent nor contested his acts, so that he must be considered to have tacitly ratified them.

Cass. 1re civ, 17 May 1993, LawLex202100002627JBJ.

Cass. 1re civ, 2 July 2014, LawLex202300008264JBJ; 9 July 2015, LawLex202300008057JBJ; 17 December 2015, LawLex202300008226JBJ.

Business Contracts

503. Ratification

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503. Ratification

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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