Compare and contrast ratification and adoption of unauthorized contracts
Both ratification and adoption are means of affirming prior unauthorized acts. Ratification binds the principal and the third party as if the purported agent had initially acted with actual authority. Once made, ratification is irrevocable. Ratification frees the agent from liability to the principal for acting without or beyond authority. The agent is also freed from liability to the third party for inducing the third party to enter the contract without the principal's authority. Adoption is the act of a corporation to affirm a preincorporation contract made on its behalf. The corporation, in addition to the promoter, becomes bound. Adoption differs from ratification because it is not retroactive and does not release the promoter from liability. The majority of states do not allow a corporation to ratify a promoter's contracts because the corporation did not exist when the contracts were made.
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Indicate whether the statement is true or false
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Fill in the blank(s) with the appropriate word(s).