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Current Developments in the Commercial Divisions of the
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Posted: January 13, 2017

No Implied Ratification Where Party Received no Benefit

On January 10, 2017, the First Department issued a decision in La Candelaria E. Harlem Community Center, Inc. v. First American Title Insurance Co. of N.Y., 2017 NY Slip Op. 00102, holding that there had been no implied ratification an agreement, explaining:

There is no triable issue of fact as to whether defendant ratified the escrow agreement that purports to be by Triad as authorized agent of defendant. Defendant submitted evidence that the woman to whom plaintiff’s employee spoke was not authorized to bind it to a transaction such as an escrow agreement. Plaintiff submitted no proof to the contrary; indeed, it did not even try to contact defendant’s former employee.

It is true that ratification may be implied where the principal retains the benefit of an unauthorized transaction with knowledge of the material facts. However, defendant submitted evidence that it received no benefits from the unauthorized escrow agreement. Plaintiff’s contention that defendant benefited because, without the agreement, the transaction would not have closed and defendant would not have received premiums from the buyer of the property, is unavailing. The plain language of the court order authorizing plaintiff to sell the property shows that the escrow was not a precondition to closing.

(Internal quotations omitted).

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