Section 195 in The Indian Contract Act, 1872

Title: Agent's duty in naming such person.

Description: In selecting such agent for his principal, an agent is bound to exercise the same amount of discretion as a man of ordinary prudence would exercise in his own case; and, if he does this, he is not responsible to the principal for the acts or negligence of the agent so selected. Illustrations (a) A instructs B, a merchant, to buy a ship for him. B employs a ship-surveyor of good reputation to choose a ship for A. The surveyor makes the choice negligently and the ship turns out to be unseaworthy and is lost. B is not, but the surveyor is, responsible to A. (b) A consigns goods to B, a merchant, for sale. B, in due course, employs an auctioneer in good credit to sell the goods of A, and allows the auctioneer to receive the proceeds of the sale. The auctioneer afterwards becomes insolvent without having accounted for the proceeds. B is not responsible to A for the proceeds.

Title: Right of person as to acts done for him without his authority.

Description: Where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. If he ratify them, the same effects will follow as if they had been performed by his authority.

Title: Ratification may be expressed or implied.

Description: Ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done. Illustrations (a) A, without authority, buys goods for B. Afterwards B sells them to C on his own account; B's conduct implies a ratification of the purchase made for him by A. (b) A, without B's authority, lends B's money to C. Afterwards B accepts interest on the money from C. B's conduct implies a ratification of the loan.

Title: Knowledge requisite for valid ratification.

Description: No valid ratification can be made by a person whose knowledge of the facts of the case is materially defective.

Title: Effect of ratifying unauthorized act forming part of a transaction.

Description: A person ratifying any unauthorized act done on his behalf ratifies the whole of the transaction of which such act formed a part.