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.
On ratification the contract is as binding upon the corporation as if it had been originally within the scope of the agent's authority.1 However, the corporation cannot, by ratification of an unauthorized contract, destroy intervening rights. Thus an unauthorized assignment cannot be ratified after the assignee has commenced action thereon so as to prevent the defendant from setting up the invalidity of the assignment.2 So ratification of an unauthorized assignment for the benefit of creditors cannot defeat the intervening lien of an execution,3 nor can ratification of an unauthorized bill of sale defeat the intervening lien of an attachment.4 If a corporation, upon learning that an unauthorized contract has been made, repudiates it, it must restore whatever it has received under such contract. It is error to give the corporation two years and six months to repay the purchase money when it avoids an unauthorized sale of land, made by its president.5
(Ky.), 63 S. W. 576; Murray v. Beal, 23 Utah 548; 65 Pac. 726.
3 Domenico v. Packers' Association, 112 Fed. 554; Newport, etc., Co. v. Lunyon, 69 Ark. 287; 62 S. W. 1047; Streeten v. Robinson, 102 Cal. 542; 36 Pac. 946.
4 Nebraska, etc., Bank v. Ferguson, 49 Neb. 109; 59 Am. St. Rep. 322; 68 N. W. 370.
5 Smith v. Water-Works, 73 Conn. 626; 48 Atl. 754.
6 Alabama National Bank v. O'Neil. 128 Ala. 192; 29 So. OSS.
7 Extension, etc., Co. v. Skinner,
28 Colo. 237; 64 Pac. 198; Savannah, etc., Ry. v. Humphrey, 114 Ga. 681; 40 S. E. 711; Spelman v. Mill Co., 26 Mont. 76; 91 Am. St. Rep. 402; 55 L. R. A. 640; 66 Pac. 597.
8 Extension, etc., Co. v. Skinner, 28 Colo. 237; 64 Pac. 198.
9 Savannah, etc., Co. v. Humphreys, 114 Ga. 681; 40 S. E. 711.
10 Fremont Carriage Mfg. Co. V. Thomsen, 65 Neb. 370; 91 N. W 370:
1 Citizens' Gaslight Co. v. Wakefield. 161 Mass. 432; 31 L. R. A. 457: 37 N. E. 444.