A mandate contract is an agreement in which one person, the principal, authorizes another person, the mandatary, to handle specified affairs on the principal’s behalf, and the mandatary’s acts within that authority bind the principal as if the principal had acted personally. The arrangement comes out of the civil law tradition, and in the United States it is most fully developed in Louisiana’s Civil Code, with the Uniform Power of Attorney Act supplying parallel rules in many other states.1Louisiana State Legislature. Louisiana Civil Code Art 2989 – Mandate Defined A mandate can cover something as small as picking up a package or as large as running a company.
What Makes a Mandate Valid
A mandate is a contract, so it needs what any contract needs: mutual consent, legal capacity, and a lawful object. Both people must be of sound mind and legal age, and the task has to be defined clearly enough that both sides know what the mandatary may do.1Louisiana State Legislature. Louisiana Civil Code Art 2989 – Mandate Defined
The form rule surprises people. A mandate does not have to be written. An oral agreement can create a valid one. The exception is tied to the underlying act: if the act the mandatary will perform must itself be in writing, the mandate authorizing it must also be in writing.2Louisiana State Legislature. Louisiana Civil Code Art 2993 – Form Selling real estate is the clearest example. Without a written mandate, a third party asked to accept someone else’s signature on a mortgage can refuse, and a court will support that refusal.
When writing is required, the document usually takes the form of a power of attorney. Many jurisdictions require notarization, and some require witnesses.
General and Special Mandates
Authority under a mandate falls into two shapes. A general mandate gives the mandatary broad power to handle whatever business is appropriate under the circumstances, which is common when the principal expects to be absent or unavailable for a stretch of time.3LSU Law. Louisiana Civil Code – Of Mandate A special mandate is narrower, limited to a single act or a defined category of acts. Selling one specific property, settling one specific debt, or signing one specific contract would each call for a special mandate, and the mandatary cannot stretch that authority to cover anything else.
Some acts always need express authorization, even when a general mandate is in place:
- Selling, buying, mortgaging, or leasing property
- Making gifts of the principal’s assets
- Accepting or rejecting an inheritance
- Borrowing money or guaranteeing debts
- Making health care decisions, including surgery, medication, and placement
- Settling disputes or entering arbitration
Each of these can permanently change the principal’s legal or financial position, which is why the law refuses to let authority for them be implied.3LSU Law. Louisiana Civil Code – Of Mandate
What the Mandatary Owes the Principal
The mandatary must carry out the task with prudence and diligence, applying the care a reasonable person would use when managing their own affairs. If the mandatary fails to perform, or performs carelessly, they are personally liable for the resulting loss.4LSU Law. Louisiana Civil Code – Of the Obligations of the Mandatary That liability applies even when the mandatary is unpaid.
Unless the agreement says otherwise, the work must be done personally. A mandatary cannot hand it off to someone else. One narrow exception exists: if unforeseen circumstances prevent performance and the principal cannot be reached, the mandatary may appoint a substitute when the principal’s interests demand immediate action.4LSU Law. Louisiana Civil Code – Of the Obligations of the Mandatary Outside that emergency, unauthorized delegation makes the mandatary liable for anything the substitute does wrong.
Loyalty and Self-Dealing
The mandatary owes a duty of loyalty, which puts the principal’s interests ahead of the mandatary’s own. This is where mandate relationships most often go wrong. A mandatary authorized to sell the principal’s property cannot buy it themselves. A mandatary running the principal’s business cannot divert opportunities to a side venture. Confidential information gained through the mandate cannot be used for personal profit.
Courts treat self-dealing harshly. A transaction tainted by conflict of interest can be voided whether or not the principal lost money and whether or not the price was fair. Any profit the mandatary made through unauthorized use of the principal’s resources belongs to the principal.
The Duty to Account
When the mandate ends, the mandatary must give the principal a full accounting of everything done and every dollar handled. The parties can waive this by agreement, but if the mandate is silent, the accounting is mandatory.5Justia Law. Louisiana Civil Code Art 3032 – Obligation to Account Any property or funds still in the mandatary’s hands have to be returned.
What the Principal Owes the Mandatary
The principal has to make sure the mandatary is not out of pocket for carrying out authorized work. That means reimbursing reasonable expenses such as travel, filing fees, and supplies. The reimbursement obligation survives even if the mandate’s purpose was never accomplished, as long as the failure was not the mandatary’s fault.6Justia Law. Louisiana Civil Code Art 3012 – Reimbursement of Expenses
A mandate can be gratuitous or paid; whatever the parties agreed to controls. If compensation was promised, the principal has to pay it. The principal also has to indemnify the mandatary for losses suffered while performing authorized acts. If the mandatary is sued over something done within the mandate, the principal generally covers the defense and any judgment, provided the mandatary was not negligent and did not act outside their authority.
How Third Parties Are Affected
Mandates matter mostly in dealings with outsiders, and the law protects those outsiders through the doctrine of apparent authority. If the principal’s own conduct leads a third party to reasonably believe the mandatary has certain powers, the principal is bound by acts within that apparent scope, even if the principal privately limited the mandatary’s real authority.
Take a principal who introduces someone as a business manager and lets them negotiate deals for months. If the principal then quietly pulls the mandatary’s authority to close a particular transaction but says nothing to the other side, the principal is still bound by what the mandatary agrees to. The third party had no way to know. Apparent authority stops principals from enjoying the benefit of an appearance of authority while shedding the consequences.
What Happens If the Principal Becomes Incapacitated
Under both the Louisiana Civil Code and the Uniform Power of Attorney Act, a mandate is durable by default. It survives the principal’s incapacity unless the document expressly says otherwise.7LSU Law. Louisiana Civil Code – Of the Termination of the Mandate The default protects principals who created the mandate precisely so someone could manage their affairs if they could no longer manage them personally.
To make a mandate end at incapacity, the document has to say so in clear language. The opposite setup is also possible. A “springing” mandate stays dormant until a triggering event, usually a physician’s determination that the principal can no longer manage their own affairs. Springing mandates give the principal more control up front, but banks and other institutions sometimes hesitate to accept them, and verifying incapacity can cause delays at the worst possible time.
How a Mandate Ends
A mandate ends automatically when the task is finished or when a built-in expiration date passes. Beyond that, the law identifies specific triggers:8Justia Law. Louisiana Civil Code Art 3024 – Termination of the Mandate
- Death of either the principal or the mandatary
- Interdiction of the mandatary, which strips their legal capacity to act
- Appointment of a curator for the principal after interdiction
- Revocation by the principal, which can happen at any time and for any reason
- Renunciation by the mandatary, who should give reasonable notice so the principal can arrange a replacement
Revocation is where disputes most often arise. The principal’s right to revoke is absolute, but revocation only takes effect once it is communicated. Until the mandatary actually knows the authority has been pulled, their acts can still bind the principal. For the same reason, third parties who deal with the mandatary in good faith, with no knowledge of the revocation, are protected. If you revoke a mandate, put it in writing and deliver it to the mandatary and to every third party who has been dealing with them.
Termination does not wipe the slate clean. The duty to account for the management and return the principal’s property outlasts the end of the relationship.5Justia Law. Louisiana Civil Code Art 3032 – Obligation to Account Anything the mandatary does after learning of termination is unauthorized and creates personal liability.