and tells X that P will pay for them. X extends the credit to P, who upon hearing of the contract ratifies it. If A loses one of the diamonds and tells P all about the contract and his loss of the one diamond, P would not be permitted to retain the three unless he paid for all. Having ratified the contract, he would be bound by the act of his agent and would have to stand the burden of the latter's negligence. 343. What contracts may be ratified; effect of ratification.-Lawful contracts may be ratified under the restrictions set forth in the previous section. Ordinarily illegal acts and contracts may not be ratified. In the case of forgery the courts do not agree. According to the rules given it would seem that a forgery could not be ratified, for the forger does not assume to act on the behalf of a principal, but acts on his own account in the principal's name. In several states, including Massachusetts, Illinois, New York and Maine, a forged signature can be ratified. In other states, including Indiana, Minnesota, Ohio and Kentucky, a forged signature cannot be ratified. This would seem to be a better rule on principle and is sustained by the best authorities amongst text-book writers. A ratification acts retroactively and binds the principal as of the time the contract was formed by the agent. EXAMPLE 324. A makes a contract in the name of and on behalf of P whereby X is to sell P all the coal that arrives at X's dock up to the first of the ensuing January. On hearing of this contract P ratifies it. When he inspects the coal, he finds more than he expected and upon learning that some of it arrived before he ratified the contract, but after it was made by A, he refuses to take that amount. This is a breach of contract for the ratification takes effect from the day the contract was formed. 344. Estoppel.-Sometimes a person is sued by another who alleges that a certain fact exists which in reality does not exist. The other, in defending the suit, will set up the non-existence of the fact. Under certain circumstances, the court will look at the surrounding facts and if it appears that the defendant has acted in such a way that people are led to believe that the alleged facts exist, the defendant will be prevented from proving that the fact does not exist. This is called an estoppel. If, therefore, a person so conducts himself or makes such representations that others are led to believe that he has appointed one his agent with certain powers, the principal will be estopped from denying the agency after third persons have dealt with the agent. Five elements are necessary to constitute an estoppel: 1. There must be false representations or concealment of material facts. This is often called a "holding out" of the facts which the person is estopped from denying. The "holding out" need not be willful. If all the other elements are present a "holding out" through mistake is sufficient. 2. The "holding out" must have been made with knowledge of the true facts. 3. The party to whom the misrepresentation was made must have been ignorant of the truth of the matter. If both parties had equal facilities for ascertaining the truth, ordinarily an estoppel is not spelled out. 4. The party to whom the misrepresentations are made must have acted relying on the "holding out.' 5. He must be damaged if the other is permitted to assert the truth. A principal may be estopped from denying either the fact of agency or the scope of the agency. The rule is sometimes stated as follows: "One who deals with an agent within the apparent scope of his authority is protected." EXAMPLE 325. P's wife manages the household and makes the usual household purchases from X. This is not strictly an agency by estoppel, but is an agency through implication. The wife has apparent authority as manager of the household to make the usual purchases on behalf of her husband. 345. Agency by necessity.-A person under certain conditions may bind another even though he has no express authority. Indeed in certain cases that authority may have been denied and forbidden. For instance, a wife is an agent to bind her husband when he fails to supply her with necessaries. The two elements to be proved when such an agency is sought to be established are (1) that the goods sold to the wife as the agent of the husband were necessary, and (2) that the husband refused to supply them. Ordinarily the fact that the husband has forbidden the wife to pledge his credit or that he has notified third persons not to supply her is immaterial. And so, the agency is not prevented by the wife's living apart from her husband if she does so with his consent or through his fault. In general this rule also governs the relation between parent and child, though in England and in some states a child is not given the same authority as a wife. A shipmaster in case of necessity may act as agent to buy necessaries or to sell the cargo or even the vessel. By referring to section 179 it will be seen that where a vendee breaks his contract and the goods have been left in the possession of the vendor, the latter may sell them as the agent of the former. In some states, by statute, the conductor of a train or other person highest in authority in the case of a railroad accident becomes an agent to hire medical aid. 346. Scope of agent's authority.—A great deal has already been said about the scope of an agent's authority to represent and act for his principal. It will be well to summarize the rules thus given and to add some illustrations. 1. Where a third person has knowledge of an express contract between the principal and agent, the agent's authority will be limited by the terms of the contract. An oral contract is more liberally construed than a written contract and the latter is given a wider interpretation than a contract under seal. EXAMPLE 326. P executed a power of attorney to A giving him the power "to bargain, sell, alien, enfeoff, transfer, and convey, by deed in fee simple," a certain lot, and "to do and perform any and all acts and deeds necessary to be done, in and about the premises." A conveyed the land to X in exchange for a stock of goods, wares and merchandise. P was permitted to set aside the conveyance. It was held that the agent had no authority to sell and convey for any other consideration than money.1 2. The agent has incidental authority to do such things as are necessary to carry out the purposes of his agency. EXAMPLE 327. P, who is engaged in the business of manufacturing mill machinery, hires A to go through the country as sales1 Sumpkin v. Wilson, 5 Heiskell (Tennessee) 555. man. A starts out one morning in a buggy hired from X to go to a mill ten miles from the station. He drives back hurriedly to catch a train and the horse becomes sick from the overdriving and dies. A had incidental authority to hire the buggy and therefore X may hold P liable for the result of A's negligent driving. 3. An agent's authority will be interpreted in the light of custom and usage surrounding the business in which he and his principal are engaged. EXAMPLE 328. P makes a contract with X whereby the produce of P's orchard is to be sent to New York for X's inspection and if found satisfactory to be sold to X at an agreed price. P sends the goods to a commission merchant, not knowing where else to send them. Unless P notifies the commission merchant promptly of his purpose in sending the goods, the latter would probably be justified in selling them as P's agent. 4. If a person has usually or frequently employed another to do certain acts for him, and has usually ratified such acts when done, such other person becomes his implied agent to do such acts. The agent may bind his principal when acting within the apparent scope of his authority. Care must be taken by a person dealing with an agent by virtue of the agent's apparent authority to see that all the elements of estoppel are present. EXAMPLES 329. A, the agent of P, sells X 1,000 cigars for $30, at sixty days. Thirty days thereafter A calls on X and asks him, "If he would just as soon pay for those cigars as not?" to which X replies that he would "as soon pay it then as any other time." A takes the money and absconds. P brings an action against X at the expiration of the sixty days for the |