Here we have an interesting argument:
Does ratification arise from acceptance of benefits under a contract, and performing duties under a contract, where the putatively ratifying party is not aware of all the terms?
American Burglary & Fire, Inc. v. Aspect Software, Inc. (E.D. Mo. No. 99472), involves a contract to monitor fire and burglar alarm system. Pertinent facts referenced in the respondent’s (Aspect’s) brief may be summarized:
Evidently ABF had installed a system on buildings owned by Quilogy. Aspect acquired the buildings “as part of a merger transaction” in January 2010. Contracts dated May 2010 concerning ongoing monitoring at the building were signed by ABF and, purportedly on behalf of Aspect by one Buxton, who had been an employee of Quilogy but had no authority to act on behalf of Aspect.
Buxton was described in appellant’s brief as one who had been the “building supervisor at Quilogy”. Appellant’s brief goes on to note:
According to the testimony of Bob Nagy, corporate controller for ABF, ABF sent over salesman Greg King to execute a new sales contract with Aspect. Larry Buxton, the building supervisor at Quilogy, signed the original contract with ABF. When Mr. King went to Aspect to execute a new sales contract, Larry Buxton was on site and signed the contracts dated May 27, 2010, for the monitoring and servicing of Aspect’s businesses…. Gene Butcher, [Aspect’s] witness, admitted to being present for the signing of the ABF contracts and asking that the billing be changed to Aspect Software and not Quilogy.
It appears Aspect used the services from ABF until some time during or after August 2010. Respondent’s brief notes that in 2010, “Aspect had a Hirsch Electronics’ alarm system installed … and, at that time, stopped using the ABF alarm system and started paying Hirsch Electronics for its alarm monitoring services.” The brief indicates payments to ABF continued until May 2011, but then discontinued payments.
One could examine the issue of apparent authority. One of this author’s favorite illustrations of apparent authority is referenced in Kanelles v. Locke, 1919 WL 922 (Ohio App) (quoting Curtis v. Murphy, 22 N.W. 825 (Wisc. 1885):
A traveler who goes to a hotel at night and finds a clerk in charge of the office, assigning rooms, etc., has the right to assume that such clerk represents the proprietor and has authority to take charge of money which may be handed him for safe-keeping.
It would seem clearly not thoughtful to maintain on-premises one who had formerly made arrangements for the owner and not clarify to those with whom the former agent had contracted the termination of authority. The analogy is not putting some new, unauthorized person behind the counter at the hotel. It’s change of ownership of the hotel, allowing the clerk to stay behind the counter but claiming the clerk’s authority has terminated.
But we will turn to the examination of ratification, discussed in only cursory terms by respondent. Here is the part of respondent Aspect’s brief concerning whether it ratified the contract:
More after the break …