What is the mandate contract?

The mandate contract is an agreement in which a person, called the principal, entrusts another person, called the agent, with the performance of certain actions or steps in his name and on his behalf. In this contract, the principal grants the agent a series of powers to act on his or her behalf, but without transferring to the agent the ownership of the rights or assets under his or her control.

It is important that the mandate contract is clear and precise in its terms to avoid any misunderstanding or conflict between the parties. If there is any doubt or if legal advice is required, it is advisable to consult a lawyer who is an expert in commercial law.

This type of contract may have different objectives, such as the performance of administrative tasks, representation in legal proceedings or the management of a portfolio of securities or investments. In addition, it can have a fixed or indefinite duration, and can be revoked by either party at any time.

One of the most relevant aspects of the mandate contract is the relationship of representation that is established between the principal and the agent. In this sense, the agent acts in the name and on behalf of the principal and, therefore, his actions bind the principal vis-à-vis third parties. For this reason, it is important that the agent acts with diligence and loyalty, and that he does not exceed the limits of the powers granted to him by the principal.

Another important aspect of the agency contract is the remuneration that the agent receives for his activity. In this respect, the agent is entitled to receive remuneration for the services he renders, unless otherwise agreed between the parties or unless the management is carried out on a not-for-profit basis.

As regards the principal's obligations, the principal is obliged to provide the agent with the resources and information necessary for the performance of the entrusted transaction. Likewise, the principal must indemnify the agent for any damages that the latter may suffer as a consequence of his actions in compliance with the powers granted.

With regard to the obligations of the agent, the latter has the obligation to act with due diligence and loyalty, and to comply with the instructions given to him by the principal in relation to the entrusted management. Furthermore, he must render an account to the principal of the actions carried out on his behalf, and return to him any property or rights that have been handed over to him at the end of the management.

As regards responsibilities, the agent is responsible for the acts performed in the exercise of the powers granted to him by the principal. In this sense, if the agent fails to fulfil his obligations or acts negligently, he may be liable for the damages he causes to the principal or to third parties.

On the other hand, the principal is liable for the acts carried out by the agent in the exercise of the powers granted, unless he proves that these were carried out without his consent or that the agent exceeded the powers granted to him.

Types of mandate contract

There are different types of mandate contracts, which differ mainly in terms of the scope of the agent's activities and the nature of the actions entrusted to him. Some of the most common types of mandate contracts are described below:

1. Mandate for the management of business: In this type of mandate contract, the principal entrusts the agent with the management of a business or enterprise for a specified period. The agent acts in the name and on behalf of the principal, and may make decisions and take actions to carry out the management of the business, such as hiring personnel, purchasing materials or negotiating contracts.
2. Mandate for the sale of goods: In this type of mandate contract, the principal entrusts the agent with the sale of a good or goods on his behalf. The agent acts in the name and on behalf of the principal, and has the power to carry out all the actions necessary for the sale, such as advertising the product, negotiating the price, signing contracts and delivering the goods.
3. Mandate for the provision of services: In this type of mandate contract, the principal commissions the agent to provide a service on his behalf. The agent acts in the name and on behalf of the principal, and may carry out all actions necessary for the provision of the service, such as hiring personnel, purchasing materials or negotiating contracts.
4. Mandate for the management of assets: In this type of mandate contract, the principal entrusts the agent with the management of his assets for a specific period of time. The agent acts in the name and on behalf of the principal, and may carry out actions for the management of the assets, such as the purchase or sale of goods, investment in funds or the management of bank accounts.
5. Legal mandate: In this type of mandate contract, the principal entrusts the agent with representation in judicial or administrative proceedings. The agent acts in the name and on behalf of the principal before the judicial or administrative body, and has the power to carry out all actions necessary to defend the interests of the principal.

How to make a mandate contract

To draw up a mandate contract, the following steps must be followed:

• Define the terms of the mandate: Before drafting the contract, it is important to define what actions or steps will be entrusted to the mandatary, for how long and under what conditions. It should also be determined whether the mandate is with or without representation.
• Identify the parties involved: It is necessary to identify the principal and the agent, including their full name, address, identity document and any other relevant information.
• Drafting the contract: The contract should include the terms agreed between the principal and the agent, such as the purpose of the mandate, the term of the mandate, the remuneration, the powers and responsibilities of the agent, the obligations of the principal, among others. It is also important to include the consequences in case of breach by either party.
• Signing the contract: Once the contract has been drafted, it must be signed by both parties. It is recommended that each party has a copy of the signed contract to avoid possible misunderstandings or conflicts.
• Registration of the contract: In some cases, it is necessary to register the mandate contract with a public entity, such as the Commercial Register or the Land Registry, depending on the object of the mandate.