What does ratification involve in the context of corporate contracts?

Ratification in the context of corporate contracts refers to the process by which a corporation approves or confirms a contract that was initially made before the corporation was formally established. This is significant because contracts made on behalf of a corporation that has not yet been formed may not be enforceable until the corporation adopts them. By ratifying such a contract, the corporation agrees to accept the obligations and benefits of the contract as if it had been made after its formation.

For instance, if an individual enters into a contract to lease property for the future use of a corporation that has not yet been incorporated, once the corporation is formed, it can ratify that lease agreement, thereby giving it legal effect. This process allows the corporation to benefit from arrangements made on its behalf before it had legal existence.

Other options refer to different actions and concepts not directly related to the ratification process. Making a payment on an old contract refers to fulfilling obligations under a previously established agreement, while entering into a contractual relationship with a partner pertains to forming a collaborative business agreement. Revoking a contract implies canceling it, which is contrary to the essence of ratification, as ratification involves acceptance rather than rejection.