The mandate contract in France: mastering the challenges for your company

Introduction

The mandate contract is an essential tool in business life. SME managers, understanding their mechanisms, challenges and pitfalls will allow you to optimize your operations, secure your commercial relationships and avoid major disputes. This detailed article, both technical and educational, will meet all your expectations on the mandate contract, by illustrating each concept with concrete examples and usual clauses.

What is a mandate contract? (Definition, Civil Code, practical scope)

A mandate contract is an agreement by which one person (the principal) gives another person (the mandatary) the power to perform legal acts in his name and on his behalf. It is governed by articles 1984 to 2010 of the Civil Code.

A common example? You entrust a commercial agent with the negotiation of contracts for your business: you are the principal, the agent your agent, and he engages the company with your customers.

Characteristics of the mandate contract:

• It is a consensual contract, it is simply the result of an agreement of wills.
• It can be written or verbal (with legal exceptions).
• It is concluded free of charge or at a charge (the remuneration must be specified, otherwise it is presumed to be free).
• It has a purely legal purpose (to exclude any material or intellectual act falling under the contract of employment).

The different types of mandate contracts

Special, general, collective mandate: definitions and uses

• Special warrant : The mandatary is responsible for one or more specific acts (for example, “selling the company vehicle”).
• General mandate : Represents all of the client's business, requires a precise definition.
• Collective mandate : Several mandataries are involved in the same operation; their respective powers should be defined.
• Commercial mandate : Mandate given to carry out commercial acts, typically the commercial agent or broker.
• Real estate mandate : Regulates the rental management or sale of a property, with regulatory specificities.

Concrete example : An SME mandates two employees (collective mandate) to negotiate the sale of shares, each decision having to be taken jointly.

Formation and conditions of validity of the mandate contract

What are the conditions to be met for a valid mandate?

• Capacity of the parties : The principal must have the legal capacity to contract, the mandatary the capacity to accept the mandate.
• Specific object : The purpose of the mandate must be clearly specified (e.g.: signing a commercial lease, negotiating a new supplier contract).
• Free and informed consent : No valid mandate without an unvitiated will.

Do you have to write?

No, except for special provisions (for example, real estate mandate). However, writing is strongly recommended to secure the evidence.

Obligations of the parties and essential clauses of the mandate contract

Obligations of the principal

• Provide the mandatary with the information necessary for the mission.
• Reimburse the costs incurred in this regard.
• Pay the remuneration, if it is provided for.

Obligations of the mandatary

• Accomplish your mission in accordance with the instructions received.
• Act in the interests of the client and report on its management.
• Demonstrate diligence, loyalty and competence.

Examples of essential clauses

The different uses of the mandate contract in business

Commercial mandate

A commercial mandate makes it possible to delegate the negotiation or conclusion of commercial acts: recruitment of a commercial agent to prospect customers, insurance brokerage, representation in tenders...
Practical case : An industrial SME entrusts an agent with the negotiation of export contracts, while maintaining the power to accept or not orders.

Banking and financial mandate

Delegation of transfer orders, portfolio management, mandate given to a chartered accountant for social and fiscal declarations.

The end of the mandate contract: causes and consequences

How does a mandate end?

• Revocation of the principal : Free, but not abusive or in bad faith.
• Revocation of the mandatary : Must be reported to the principal, subject to compensation if it causes harm.
• Death, incapacity or judicial liquidation : Terminate the mandate immediately, unless expressly stipulated.
• Realization of the object : Examples: sale completed, mission completed.
• The case of mandates of common interests : Indemnification generally due in case of premature revocation.

Educational framework: the main risks and precautions

• Write clear and precise writing, especially in the case of major transactions (sale, negotiation, fundraising).
• Define powers formally: the wider the power, the higher the risk for the grantor.
• Be vigilant about remuneration, especially in case of uncertain results.

Fundamental distinctions

Difference between mandate contract and employment contract

The relationship of subordination is the key element:

• In an agency contract, the mandatary acts independently, according to simple general instructions.
• In an employment contract, the employee is under the authority of the employer; he carries out his tasks according to the orders received.

Concrete example:
A company that hires an independent commercial agent (agent) to develop the customer portfolio does not have disciplinary power over the agent. On the other hand, an employed salesperson is subject to working hours and may be sanctioned.

Difference between mandate contract and company contract

• The Mandate contract relates to a legal act (representation, contract negotiation).
• The business contract concerns the carrying out of material or intellectual work.

Example:
You mandate a lawyer to sign a memorandum of understanding (legal act) = mandate.
You are recruiting a company to carry out an audit = contract of employment.

Difference between mandate and power of attorney

• The mandate : contract between principal and mandatary, organizes the legal relationship as a whole.
• The power of attorney : unilateral act giving power to the mandatary to act for the principal before third parties.

Example:
The banking power of attorney allows an employee to sign for the company on the account (power of attorney = technical power, based on the underlying mandate contract).

Examples and sample mandate contracts

Excerpt type of mandate contract

“The principal entrusts the mandatary, who accepts, with the mandate to negotiate and conclude any supply contract in the name and on behalf of the principal, for a period of 12 months renewable by tacit renewal. The mandatary will be paid 2% of the amounts collected following the various contracts signed under this mandate.”

Practical points of vigilance for SME managers

• Always check the capacity of the mandatary (natural or legal person).
• Clearly define in writing the powers of the mandatary and their limits, the conditions of revocation, remuneration, and accountability.
• In case of succession of mandataries: provide for the continuity or the termination of the mandate.

FAQ: all the answers to your questions

What are the 3 main types of mandates?

The three main categories recognized are:

• Special mandate (for a specific operation)
• General mandate (all matters of the principal)
• Collective mandate (several mandataries interact for the same object)

What is the difference between a mandate contract and an employment contract?

The mandate implies the independence of the mandatary, who is only bound by one mission. The employment contract implies a relationship of subordination, which is part of the performance of the work and the integration into the company.

For an in-depth file: Cumulation of employment contract and social mandate

What is the difference between a contract of employment and a contract of attorney?

The mandate relates exclusively to one or more legal acts, while the contract of employment concerns the provision of a material or intellectual service.

What is the difference between a power of attorney and a mandate?

The power of attorney is the operational tool of the power conferred by a mandate: the power of attorney authorizes representation, while the mandate establishes the overall legal relationship.

Mandate contract and Civil Code: what does the law say?

The Civil Code (articles 1984 to 2010) is the reference: it applies to any mandate and regulates the formation, operation, purpose and related responsibility. Careful reading makes it possible to anticipate the risks inherent in delegations of powers.

Examples of mandate contracts that can be used in SMEs?

A commercial agent mandate contract, a rental management mandate, a mandate for banking transactions, a social mandate (management of a SARL).

A regulated matter, the importance of assistance from a lawyer

Mandate law is particularly technical and marked by strong developments in case law, especially in the event of requalification or liability. To secure each stage — from drafting to execution, including negotiation — it is therefore recommended to consult a lawyer, who will be able to anticipate all the problems specific to your activity and your challenges.

Article written by Guillaume Leclerc, lawyer in commercial contracts and commercial litigation in Paris

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