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Contract Ratification

Only a party to a contract is bound by the contract’s terms and conditions; therefore, non-parties cannot be held liable for breach of contract. Kahn v. Prahl, 414 S.W.2d 269, 278 (Mo. 1967); Landstar Investments II, Inc. v. Spears, 257 S.W.3d 630, 632 (Mo. Ct. App. 2008) (“a contract generally binds no one but the parties thereto, and it cannot impose any contractual obligation or liability on one not a party to it”).

In certain circumstances, a non-party may be bound by a contract if he/she ratifies it. Ratification is a broad term, but in the context of contracts, it generally describes an express or implied adoption or confirmation of another person’s acts, or an act which conforms an otherwise voidable contract into one that is valid and enforceable. American Multi-Cinema, Inc. v. Talayna’s N.W., Inc., 848 S.W.2d 557, 559 (Mo. Ct. App. 1993); Springfield Land and Development Co. v. Bass, 48 S.W.3d 620, 628 (Mo. Ct. App. 2001). Ratification is different from estoppel, which involves the inducement of someone to act to his/her detriment. Springfield Land and Development Co., 48 S.W.3d at 628. Ratification need not be intentional, either. Its importance is particularly highlighted in agency, corporate and business law. In an agency situation (e.g., where someone is acting on behalf of an employer or business), ratification occurs when A confirms or adopts the conduct of  B, who acted on behalf of A in absence of A’s authority. Id. If a contract or agreement is deemed ratified, then the ratifying party is bound by the terms of the contract.

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