Agency by ratification occurs when ______.

Agency by ratification occurs when a principal accepts or approves an act that was performed by an agent who did not have the authority to act on the principal's behalf at the time the act was executed. This process effectively validates the act and gives it legal standing, as if the agent had the authority in the first place.

In the context of the given options, the correct choice indicates a scenario where the agent, acting without proper authority, engages in actions that the principal later negotiates to accept. This can happen when the agent misrepresents their ability to act for the principal, and the principal afterwards chooses to endorse the agent's act, thereby formalizing it.

The other options do not accurately describe the concept of agency by ratification. Denying an agent's authority aligns more with disaffirmation rather than ratification. An agent fulfilling an unauthorized act could be part of a ratification scenario, but it lacks the specificity needed to define agency by ratification without the principal’s subsequent acceptance. Lastly, a third party initiating termination pertains to the relationship dynamics between the principal, agent, and third party, but does not outline the process by which ratification occurs. Overall, the correct answer highlights the essential characteristic of agency by ratification, where