Estoppel and Ratification Distinguished
The two concepts of ratification and estoppel are somewhat similar, but they are different in the sense of the confirmation.
In both cases, the agency relationship was not clear and defined, and it took a subsequent act to make the antecedent agreement, a valid and enforceable contract.
In the case, of estoppel, it is the Principal who acts. The agent had no authority, but, the Principal does something that allows a third party to say that the Principal is prevented (or estopped) from denying that the agent was truly acting for the Principal. Here, it is the contract of agency which is confirmed or acknowledged.
When considering ratification, again it is the Principal who acts. The agent had no authority, but the Principal does something to confirm the agreement between the Principal and the third party. This cannot be the case, unless the agency agreement is found to be in place. So, when the Principal adopts the benefit of the contract, this ratifies and confirms the contract of agency.
So, to summarize the confirmation:
Estoppel: Principal confirms the agency contract
Ratification: Principal confirms the third party agreement
The result in both cases is the same. The agent is deemed to be the agent of the principal right from the beginning.
The two legal doctrines are sufficiently similar that in most cases a plaintiff will allege either estoppel or ratification and let the Court decide.
Brian Madigan LL.B., Broker