What does the term "ratification" refer to in agency law?

In agency law, the term "ratification" specifically refers to the formal approval of an agent's act by the principal. This concept is essential because it allows a principal to accept and adopt actions taken by the agent that were not authorized at the time they were executed. For instance, if an agent acts on behalf of a principal without prior consent—which constitutes an unauthorized action—the principal has the option to ratify that action later if they agree with it and wish to be bound by it.

Ratification plays a critical role in establishing the validity of agency actions and can affirm or create legal obligations for the principal based on the agent's actions. It underscores the importance of the principal's role in overseeing and endorsing the agent's conduct, reinforcing the notion of agency as a relationship built on trust and mutual agreement between the principal and agent.