Understanding Mandates and Agency Agreements

Posted on Oct 27, 2024 in Law & Jurisprudence

Mandate and Agency Agreements

Definition of Mandate

A mandate is a contract where one person (the principal) entrusts the management of one or more businesses to another (the agent), who undertakes them at the principal’s risk. The person giving the mandate is called the principal, and the one accepting is the agent, attorney, or representative.

Key Aspects of Mandates

Formation and Acceptance

  • Mandates can be free or paid, with remuneration determined by agreement, law, custom, or a judge.
  • A mandate can be granted through various means, including deed, public or private document, mail, orally, or even tacit acquiescence.
  • The contract is perfected upon the agent’s acceptance, which can be express or implied.
  • Upon acceptance, the agent can withdraw as long as the principal can still manage the business themselves or entrust it to someone else.

Agent’s Responsibilities and Powers

  • The agent must adhere strictly to the mandate’s terms, unless the law authorizes otherwise.
  • They can use equivalent means to fulfill the mandate if necessary and the object is secured.
  • Agents cannot buy or sell things on their own behalf that the principal has instructed them to handle, unless expressly authorized.
  • They must account for their administration and document significant items unless relieved by the principal.
  • Agents are liable for ordinary negligence, with stricter liability for paid agents.

Principal’s Obligations

  • The principal must provide the agent with necessary resources.
  • They must reimburse reasonable expenses, pay agreed-upon compensation, and cover losses incurred by the agent without fault.
  • The principal is bound by the agent’s actions within the mandate’s limits.

Termination of Mandate

  • A mandate ends upon completion of the business, expiration of the term, revocation by the principal, resignation by the agent, death or insolvency of either party, or cessation of the principal’s functions if the mandate was tied to them.
  • The principal can revoke the mandate at their discretion, but the revocation takes effect when the agent becomes aware of it.

Other Relevant Provisions

  • If the business interests only the agent, it’s mere advice and doesn’t create obligations, unless given maliciously.
  • If the business interests both parties or a third party, it’s a real mandate; if the principal acts without the third party, it’s a quasi-mandate.
  • If there are multiple agents, they can divide the management unless forbidden to act separately.
  • The agent can delegate the task unless prohibited, but is liable for the delegate’s actions unless the principal authorized a specific delegate.
  • The agent can hire in their own name or the principal’s name.
  • Acts performed by an authorized agent have the same effects as if the principal performed them.