LA BAR EXAM NON-CODE TOPIC 1 MANDATE Flashcards
I. Introduction - Representation Defined
Mandate is one form of representation. Representation occurs when one person represents another person in that person’s legal relations.
Representation can arise by operation of law or by juridical act.
I. Introduction - Mandate Defined
A mandate is a contract between a principal and a mandatary conferring on the mandatary the authority to transact on behalf of the principal.
I. Introduction - Types of Mandate
A contract of mandate may be either gratuitous or onerous. The contract may be for the individual benefit of the principal, the mandatary, or a third person, or the contract may be for their common benefit. A person can be the mandatary of two or more principals, but must disclose his representation to all parties.
Remember that no payment is required for a contract of mandate; i.e., one may agree to serve as a mandate gratuitously and be saddled with the duties of a mandatary.
I. Introduction - Form and Recordation of Contract of Mandate
A mandate has no form requirements, so an oral mandate may be enforceable.
Exception: The “equal dignity” rule applies here. If the act to be performed by the mandatary is one that must be in a certain form, the act creating the mandate also must be in that form. Thus, a mandate to buy or sell immovable property must be in writing, since a transfer of immovable property must be in writing. However, the written mandate does not require a specific description of the property.
Unlike many other contracts affecting rights in immovable property, an act of mandate that confers on the mandatary the authority to transfer, acquire, or encumber an immovable need not be recorded to be enforceable against third persons. However, once an act of mandate is recorded, it continues to have effect against third persons, even if it is no longer enforceable between the parties, until a revocation or modification of the mandate is recorded.
I. Introduction - Mandatory’s Authority
The principal may confer general authority on the mandatary to do whatever he thinks is appropriate. Regardless of whether the mandate was one of general authority, the mandatary can do any acts that are either incidental or necessary for performance of his mandate.
Exception when Express Authority Required -
Certain acts cannot be performed by the mandatary unless the principal has given express authority. The following acts require express authority:
a. Acquiring, alienating, encumbering, or leasing property;
b. Making an inter vivos donation;
c. Accepting or renouncing a succession;
d. Contracting a loan, or acknowledging or remitting a debt,
e. Becoming a surety;
f. Making or endorsing a promissory note or negotiable instrument,
g. Entering into a compromise or agreeing to arbitration; and
h. Making health care decisions.
II. Relationship Between The Principal and The Mandatory - Duties of Mandatory
The duties of the mandatory include (i) the duty to act with prudence and diligence, (ii) the duty to give information, (iii) the duty to deliver to the principal.
The mandatary is bound to fulfill the mandate and to act with prudence and diligence. If the mandatary breaches this responsibility, he is liable to the principal for the principal’s losses. However, the mandatary’s liability for breach can be reduced by the judge if the mandate is gratuitous. In the absence of contrary agreement, the mandatary is bound to fulfill the mandate himself.
The mandatary is bound to give information to the principal, to account for his performance, and to notify the principal when he has fulfilled his responsibilities.
The mandatary must deliver to the principal all that the mandatary has received on account of the mandate, less his expenses and remuneration.
A mandatary who exceeds the authority invested in him by the principal is liable to the principal for any loss the principal has sustained. If the mandatary sustains loss because he has exceeded his authority, he cannot recover from the principal unless the principal ratifies the unauthorized acts. A mandatary does not exceed his authority when he fulfills his duties in a manner more advantageous to the principal than what was authorized.
II. Relationship Between The Principal and The Mandatory - Duties of Principal
The principal has the (i) liability for obligations and (ii) the duty to reimburse the mandatory.
The principal is bound to the mandatary to perform the obligations that the mandatary contracted within the limits of his authority, even if the mandatary is unsuccessful in his tasks. The principal is bound to the mandatary for obligations contracted by the mandatary after termination of the mandate but before the mandatary knows of the termination. She is not bound to the mandatary for obligations that the mandatary contracted beyond the mandatary’s authority unless the principal has ratified them.
The principal must reimburse the mandatary for his expenses and charges and for any remuneration to which the mandatary is entitled
The principal also must reimburse the mandatary for any loss sustained by the mandatary without fault.
III. Relationships Between The Principal, The Mandatory, and Third Persons - Obligations of Mandatory to Third Persons
The obligations created toward a third person depend on the third person’s knowledge of the mandate and of the identity of the principal.
There are three possibilities:
a.
Disclosed mandate and disclosed principal;
b.
Undisclosed mandate; and
c.
Disclosed mandate but undisclosed principal.
If the mandatary discloses the mandate and discloses the principal to the third person, and if the mandatary’s acts are authorized, the man-datary is not personally bound to the third person. Only the principal is bound.
If the mandatary contracts with a third party in his own name without disclosing the mandate, he is personally bound to the third party.
If the mandatary informs the third party that he is acting as a mandatary for a principal whose identity he does not disclose, the mandatary is personally bound to the third party until the identity of the principal is disclosed to that third party.
Remember that the type of mandate (disclosed, undisclosed, or partially disclosed) is relevant only when you are considering whether the mandatary is liable. Do not discuss the type of mandate when analyzing the principal’s
liability. Any type of principal will be bound as long as the mandatary had authority.
A mandatary who exceeds his authority is personally bound to the third party, with two exceptions:
a. Where the third party knew that the mandatary was exceeding his authority, or
b. Where the principal ratifies the contract.
III. Relationships Between The Principal, The Mandatory, and Third Persons - Obligations of Principal to Third Party
The principal is bound to the third party for all contracts made by the mandatary within the limits of his authority.
If, in the absence of a mandate, someone the putative principal” causes a good faith third party to believe that another person is his man-datary, then the putative principal is bound to the third party.
III. Relationships Between The Principal, The Mandatory, and Third Persons - Obligations of Third Party to Principal
A third party who contracts with a mandatary is bound to the principal if the mandatary contracted in the principal’s name (i.e., disclosed mandate and disclosed principal), or if the mandatary disclosed the mandate but not the identity of the principal (i.e., partially disclosed mandate).
The third party is bound to the principal even in the case of the undisclosed mandate unless the obligation is strictly personal or the right is unassignable.
IV. Termination of Mandate - General Rules for Terminating a Mandate
The mandate terminates and the mandatary’s authority ceases upon:
1. Death of either the principal or the mandatary;
2. Interdiction of the mandatary or qualification of the curator after interdiction of the principal; or
3. Notice of termination by either party.
IV. Termination of Mandate - Exceptions
Even where the mandate has terminated by one of the permitted methods of termination, the mandatary’s authority continues in the following
- Third Party Not Notified of Termination
The principal has a duty to notify third persons who were authorized to contract with the mandatary of the revocation of the mandate, and he is bound by any contracts entered into by the mandatary with third parties who were not so notified. - Special Rule Where Termination Results from Principal’s Death
Where the mandate ends due to the principal’s death, the mandatary nonetheless must complete any undertakings commenced prior to the principal’s death if delay would injure the principal’s interest. - Public Records Doctrine Exception
If the mandate has been recorded, any revocation or modification of it also must be recorded to affect third parties entitled to rely on the public records. - Mandatary Unaware of Termination
If the mandatary is unaware of termination of the mandate, any contracts he has entered into in good faith with third parties are binding on the principal. - Special Rule When Principal Lacks Capacity
If a mandatary has reasonable grounds to believe that the principal lacks capacity, the mandatary cannot simply terminate and walk away.
The mandatary’s termination is effective only when he notifies another mandatary, a designated successor mandatary, or if neither of these are available, another person with a sufficient interest in the welfare of the principal. The mandatary remains responsible for the consequences of his failure to fulfill the mandate until proper notice is given. Note that the person so notified is not required to accept responsibility for the principal or to take any other action.
V. Management of Affairs - Definition
A management of affairs occurs when a person (the manager) acts without authority to protect the interests of another (the owner), in the reasonable belief that the owner would approve of the action if made aware of the circumstances.
V. Management of Affairs - Governing Rules
Generally speaking, a management of affairs is subject to the same rules as a mandate to the extent that those rules are compatible with a management of affairs.
V. Management of Affairs - Notice Required
The manager must promptly give notice to the owner that he has undertaken the management and await further directions from the owner, unless there is an immediate danger.
