What is it called when an agent takes actions in the name of the principal without prior approval, which can later be approved by the principal?

When an agent acts in the name of the principal without prior approval, that action can be subsequently confirmed or accepted by the principal through a process known as ratification. Ratification occurs when the principal gives retroactive approval to the agent's unauthorized actions, effectively making those actions binding on the principal as if they had been authorized initially.

This concept is crucial in agency law because it allows for flexibility in business transactions. It acknowledges that agents may sometimes need to act quickly or autonomously without waiting for explicit permission from the principal. Once the principal ratifies the agent's actions, those actions hold the same legal effect as if the principal had originally authorized them.

In contrast, the other options do not fit this context. Estoppel pertains to preventing a party from denying facts due to their previous conduct or representations. Implied authority arises from the circumstances and the relationship between the agent and principal, suggesting that an agent has the authority to act in a manner that is customary for their role. Disclosure simply refers to the act of making information known and does not relate to actions taken without prior approval.

Overall, understanding ratification is vital for both agents and principals, as it highlights the scope of authority and the binding nature of decisions made within the agency relationship.