FORT LAUDERDALE BUSINESS LITIGATION: PRINCIPALS CAN BIND THEMSELVES TO CONTRACTS OR TRANSACTIONS AFTER-THE-FACT BY RATIFICATION

The acts of an agent are imputed to the agent’s principal so long as the agent acted within the scope of his or her authority. The scope of that authority is often derived from actual or apparent authority provided by the principal. Taco Bell of Cal. v. Zappone, 324 So. 2d 121 (Fla. 2d CA 1975) (“[T]o bind his principal, an agent’s actions must be within the scope of his express or implied, i.e., his ‘actual or real’ authority, or be of such a nature as third parties would be entitled to rely upon as being within his apparent authority.”). Typically, an agent’s actions exceeding the bounds of his or her authority will not bind the principal. However, an exception exits if the principal subsequently ratifies the agent’s unauthorized acts. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

“[R]atification… occurs where a person expressly or impliedly adopts an act or con-tract entered into in his or her behalf by another without authority.” Deutsche Credit Corp. v. Peninger, 603 So. 2d 57 (Fla. 5th DCA 1992). Ratification does not require expressed through words, but “there must be some intelligent act or conduct of the principal, made with a full knowledge of the facts, which clearly shows an intention to be bound.” Stalley v. Transitional Hospitals Corp. of Tampa, Inc., 44 So. 3d 627 (Fla. 2d DCA 2010). Therefore, a principal can only ratify his or her agent’s actions if the principal has “full knowledge of all material facts and circumstances relating to the unauthorized act or transaction at the time of the ratification.” Constructive knowledge does not ordinarily satisfy the knowing requirement because the knowledge must be actual. Frankenmuth Mut. Ins. Co. v. Magaha, 769 So. 2d 1012 (Fla. 2000).

Frankenmuth Mut. Ins. Co. v. Escambia County, Fla., 289 F. 3d 723 (11th Cir. 2002) illustrates how a principal’s subsequent actions can bind the principal to a transaction or contract the principal never authorized his or her the agent to enter. The principal in Frankenmuth Mut. Ins. Co.  was the county and its agent was the county comptroller. The comptroller entered a lease agreement on behalf of the county for certain computer equipment without obtaining permission from the county. The comptroller used the computer equipment for several years and submitted annual budgets disclosing the computer lease as a line item. The county commission approved the budgets without realizing the lease line item. Sometime thereafter, the county considered acquiring its own computer equipment, and the comptroller informed the county that it already possessed the computer equipment. The county decided to use the computer equipment obtained by the comptroller through the lease. But several years later, the county changed its mind, stopped paying the lease, and declared the lease void because the comptroller did not have authority to enter the lease on behalf of the county. The leaseholder filed suit and the court granted summary judgment in its favor because it determined the county ratified. The court arrived at its conclusion because (1) the county was fully informed of the terms of the lease when the comptroller sent the county a letter explaining the lease and its terms and (2) the county affirmed a plan to integrate the comptroller’s computers with the county’s other computers. These actions, along with the county’s prior budget approvals, demonstrated the county intended to ratify the lease.

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.