Carol learns that Dave has hired a new employee to work at her company. Although Dave did not have permission to hire the new employee, Carol likes the new employee and decides to honor all the terms of the employment contract that Dave negotiated. Which of the following types of agency relationship have Carol and Dave formed?

Question

Quizplus · Accepted Answer

Carol and Dave are in an agency relationship through ratification because Carol is accepting and approving of Dave's unauthorized actions in hiring the new employee after the fact. Ratification occurs when a principal (Carol) affirms a previously unauthorized action made by an agent (Dave) and accepts the responsibilities and consequences associated with that action.

Carol Learns That Dave Has Hired a New Employee to Work