When discussing agency, you may have to discuss ratification. Here is a skeleton outline. Then a sample is presented.

1. Actual Authority

     a. Express
     b. Implied.

2. Apparent Authority. 

Then, discuss Ratification.


Let’s look at an actual example. This is from Question 4 of the February 2012 California Bar Exam. See Answer A. The relevant facts and the parts of the model answer will be presented in different format for emphasis.


Testco, Inc. conducts market surveys, and is solely owned by Amy, Ben, and Carl. Each paid $50 for one-third of Testco’s no-par shares. Amy and Ben, respectively, are Testco’s president and secretary and its only two directors. Carl holds no office and is not involved in any aspect of Testco’s business.

     Answer A. 

Amy’s Authority.

A principal is liable on the contracts entered into by their agent on their behalf so long as  the agent has authority. Authority can come in three formsactual authority, apparent authority, and ratification. [This is the rule.]

             1. Actual Authority.

Actual authority is the authority that the agent reasonably believes that they have based upon the manifestations of the principal. Actual authority can be express or implied. [This is the rule.]

                     a. Express Actual Authority 

Express actual authority is the authority given from the four corners of the agency agreement. [This is the rule.]

Here, there is . . . [This is the analysis.]

                    b. Implied Actual Authority

Implied actual authority is the authority that the agent reasonably believes that they have based upon necessity in order to carry out their express authority, customs of the position held by the agent, and by prior dealings with the principal. [This is the rule.]

Here, Amy, as president of Testco, would likely have  implied actual authority to enter into the Examco contract by virtue of her position as president of the company. Presidents of corporation[s] customarily have the authority to enter into binding contracts with other companies. . . . [Analysis continues.] (NoteAssume that the discussion on actual authority is completed. The writer then moves on to apparent authority.)

2. Apparent Authority 

In the event that the court finds that there was no actual authority, they could find apparent authority to bind Testco to the contract. Apparent authority is the authority that a third party reasonably believes that the agent possesses based upon the manifestations of the principal. One form of manifestation by the principal would be the position that the principal has placed the agent in is a position that is usually associate[d] with the grant of authority. [This is the rule.]

Here, Examco can successfully argue that Amy had apparent authority do [sic] to her title of president of Testco. When they were entering into the contract they dealt directly with the president of the company. …. [The analysis continues.]

(NoteAfter discussing actual and apparent authority, the examinee then discusses ratification.)


Another form of authority is ratification. Ratification occurs where after the agent has entered into a contract, the principal has knowledge of it and accepts its benefits. [This is the rule.]

Here, when Amy told Ben about the contract, he told her to immediately revoke it. Thus there was no board resolution ratifying the contract with Examco and there will be no finding of authority based upon ratification. [This is the analysis.]

(Note: Why should you discuss ratification? The reason is because you want to have thorough discussions. Cover all the bases. If you can’t get the person through agency, see if there is another way to form an agreement. In this area of law there is. It is through ratification. Even if it does not apply, consider mentioning ratification. This informs the bar grader that you know the subject matter well.)

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The Dormant Commerce Clause.

Imagine this: It’s Day 1 of exam day. You open the booklet for Essay 1 and it relates to something dealing with the Commerce Clause. You then ask yourself if you know the rule. What is the rule to the Commerce Clause besides “regulate channels”?

You then remember a strong answer! There is the Dormant Commerce Clause!!! Along with this, there are three common sub-rules. They are listed here in terms you can remember.

Here is the approach: Start with the Commerce Clause rule and then state the rule for Dormant Commerce Clause. Then discuss the elements that are presented here.


Congress has the plenary power to regulate the channels, instrumentalities and any activity that substantially affects interstate commerce.

Then move to the Dormant Commerce Clause. Use this rule below. You can use a separate paragraph or the same paragraph as the one you use for the Commerce clause.

However, this authority is not absolute. States are allowed to regulate commerce if such regulation is not preempted by federal law, and so long as the State regulation does not discriminate against out of staters. If the state regulation discriminates on its face against out of staters, it violates the DCC unless the regulation is necessary for a compelling state interest (strict scrutiny). If the regulation does not discriminate against out of staters, it usually will be upheld so long as it does not unduly burden interstate commerce. Source: Answer A to Question 5 of the July 2018 California Bar Exam.

Exam Tip: Consider if the law discriminates on its face. Here is a tip to check for this. See if State A law explicitly favors its residents over the residents of other states. If so, the law discriminates you should discuss strict scrutiny. This will be covered below.

Thereafter, regardless of whether the law discriminates, use one of the three sub-rules shown here. Most likely all three will not apply. Use the rule(s) that are most relevant to the hypothetical.

Three Common Sub-Rules under the Dormant Commerce Clause.

1. Unduly burdensome. Key: State’s Non-economic interest. Not difficult to analyze.
2. The Market-Participant Doctrine. Not difficult to analyze.
3. Discriminates on its face (the language of the statute explicitly discriminates). Use this element to help you: “No less discriminatory alternatives.” Usually the state will not prevail here.

Here is how you analyze these Sub-Rules.

1. Unduly burdensome.

Key: Discuss State’s Non-Economic Interest.

Apply a balancing test. Discuss the state police powers: Health, safety, and welfare.

2. The Market-Participant Doctrine.

Use this rule: “When a state or local government enters the market as a participant it is not subject to the restraints of the Commerce Clause.”

Then determine whether the state is a market participant. There are exceptions to the market-participant rule. But we’ll get to that later. Usually, people merely discuss whether the state falls within the category of a market-participant.

3. Discriminates on its face (the language explicitly discriminates).

Key: No less discriminatory alternatives. Strict scrutiny is implicated (as mentioned above).

Use this rule: “The state must show that it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives. This is a high standard that the state must meet.”

For an example on how the commerce clause appears on an exam, see Question 5 of the July 2018 Cal Bar Exam.
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