All the following must be met for ratification of unauthorized actions to be effective EXCEPT:

• A. The third party's consent to the ratification must be obtained by the principal.
• B. Once ratification has been made, a contract is in effect.
• C. The principal must accept the agent's transaction in its entirety.
• D. There must have been a representation of agency by the agent to a third party.

Answer: (B)

Ratification occurs when the principal adopts an unauthorized act by their agent, making the act binding as if the agent had authority from the start. For ratification to be effective, several conditions typically must be present: there has to have been an unauthorized act by the agent; the principal must intend to ratify and do so with knowledge of the material facts; the ratification must cover the transaction in its entirety; and there must have been some representation of agency to the third party (the third party must have been dealing with someone who appeared to act on behalf of the principal).

The statement that is the exception is the idea that, once ratification has been made, a contract is in effect. That describes the consequence of ratification rather than a prerequisite condition. Ratification creates or retroactively binds the principal to the contract, but the requirement isn’t that a contract must be in effect at the moment of ratification; rather, ratification itself brings the contract into existence with retroactive effect.