In Elting v. Elting, what is required for ratification of anUnauthorized partnership action?

• A. Actual knowledge of material facts is required for ratification
• B. Constructive knowledge suffices
• C. Ratification can be inferred from silence
• D. Ratification requires majority vote

Answer: (A)

The main concept tested is what level of knowledge a partner must have to ratify an unauthorized partnership action. In a partnership, one partner may undertake an action without authority, and for the partnership to bind itself by ratifying that act, other partners must assent with sufficient awareness. In Elting v. Elting, the court makes clear that ratification requires actual knowledge of material facts. It’s not enough to know that an action occurred or to have a general sense of the situation; the approving partner must actually know the essential details that would make the action appropriate to ratify. This prevents ratification from being inferred from mere awareness or silence.

Constructive knowledge, or knowledge inferred from circumstances that a reasonable person should know, does not suffice here because it would allow ratification to occur without the approving party truly understanding the crucial facts. Silence also cannot itself amount to ratification, since ratification requires a definitive affirmative act or assent after informed consideration of the facts. Majority voting isn’t the controlling mechanism in this context either, because ratification hinges on the presence of actual knowledge and conscious approval rather than a procedural tally.

To summarize, the key idea is that true ratification requires actual knowledge of the material facts surrounding the unauthorized action, not just awareness, silence, or generalized consent.