Agency; unauthorised acts by agent; ratification; undisclosed principal.
Facts: Keighley, Maxsted & Co authorised Roberts, a corn merchant, to buy wheat at a certain price for their joint account. Roberts purchased wheat at a higher price in his own name from Durant. Later, Roberts said that he had always intended to purchase this wheat for his joint account with Keighley, Maxsted & Co and the company assented to the acquisition. But Durant was not paid for the wheat, and he sued Keighley, Maxsted & Co for the price.
Issue: Had Keighley, Maxsted & Co effectively ratified Roberts's unauthorised act, and so become liable as a party to the contract with Durant?
Decision: The court held that, in the circumstances, Keighley, Maxsted & Co could not validly ratify the contract.
Reason: Roberts had never told Durant that he was acting on behalf of any other person. Because an undisclosed principal is a stranger to the contract that is created, they cannot become a party by subsequent ratification. It is different when, at the time of the agreement, the unauthorised agent informs the third party that he or she is acting for an identified or identifiable principal, because then the contract is entered into in the expectation that the disclosed principal is a party to the contract.