This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The conduct which is relied upon as ratification must be conduct which shows unequivocally that the defrauded party intends to be bound by the contract which he was induced to enter into by fraud.1 If the defrauded party gives notice promptly that he repudiates the contract, and the adversary party declares the contract terminated for other reasons, the failure of the defrauded party to return the contract or to demand repayment of the money which he had paid, for more than a year, does not operate as a ratification if such party is not in possession.2 The fact that the lessee under an oil lease continued to use part of the oil taken from the property for about six weeks after discovering the facts, is said not to defeat his right to rescission, but only to render him liable to pay a reasonable price for the oil thus used.3
If the defrauded party receives benefits which he would be en-titled to receive without regard to the contract which is induced by fraud, such reception of benefits of itself does not amount to ratification.4 If the owner of goods sells them to one who does not intend to pay therefor, the act of such owner in demanding such payment after he learns of the fraud does not amount to ratification of such contract, and it does not prevent him from avoiding such contract and bringing an action to replevin such goods.5 The act of an employe in continuing in his employment after discovering the fact that he has been induced by fraud to release a claim for personal injury, is not ratification of such release, even though one of the terms of such release provided for permanent employment.6 If A has been induced to sell goods by fraudulent representations as to the identity of the purchaser, A's act in attaching such goods as those of the purchaser does not amount to ratification.7 The owner of property who has been induced to sell it on credit to one who buys it without the intention of paying therefor, does not waive his right of action for deceit, by proving his claim under such contract against the estate of the bankrupt purchaser and by receiving a dividend on such claim in composition thereof.8
6 Whitney v. Bissell, 75 Or. 28, 146 Ac. 141.
7 Dakota National Bank v. Taylor, 5 S. D. 99, 58 N. W. 297.
8 Ingram v. Abbott, 14 Tex. Civ. App. 583, 38 S. W. 626; Stelter v. Fowler, 62 Wash. 345, 113 Ac. 1096 [motion to modify judgment denied, 62 Wash. 351, 114 Ac. 879].
1 Pelham v. Chattahoochee Grocery Co., 146 Ala*. 216, 119 Am. St. Rep. 19, 8 L. R. A. (N.S.) 448, 41 So. 12; Putney v Schmidt, 16 N. M. 400, 120 Ac. 720.
2 Ballard v. Lyons, 114 Minn. 264, 38 L. R. A. (N.S.) 301, 131 N. W. 320.
3 Basye v. Paola Refining Co., 79 Kan. 755, 25 L. R. A. (N.S.) 1302, 101 Ac. 658.
4 Pelham v. Chattahoochee Grocery Co., 146 Ala. 216, 8 L. R. A. (N.S.) 448, 41 So. 12; Coles v. Union Terminal Ry. Co., 124 la. 48, 99 N. W. 108.