Spanish Civil Code Mandate Contract: Definition & Termination
Concept of the Mandate Contract
Article 1709 of the Civil Code (CC) defines the mandate contract as one where “a person undertakes to provide a service or do something on behalf or commission of another.” This definition in the Civil Code is somewhat vague and doesn’t clearly distinguish the mandate contract from other contractual figures, such as the leasing of works and services, where the lessor is also obliged to do something or provide a service. However, legal practice distinguishes mandate and leasing as different figures.
In the Roman system, the criterion for distinguishing between mandate and the leasing of services (locatio conductio operarum) was whether it was gratuitous. However, for the Civil Code, this criterion is insufficient because the mandate can also be remunerated. Currently, the distinction between leasing and mandate lies in the nature of the obligations:
The agent is obliged to manage the principal’s interests by performing specific legal acts whose effects fall within the principal’s legal sphere; that is, the agent’s performance must have legal relevance for the principal.
Albaladejo defines the mandate contract as a consensual agreement whereby one person (the agent) agrees with another (the principal) to perform a legal act on the principal’s behalf.
Termination of the Mandate Contract
Article 1732 of the Civil Code, as amended by Law 41/2003 of November 18 (on the Patrimonial Protection of Persons with Disabilities, amending the Civil Code, the Civil Procedure Law, and Tax Regulations), states: “The mandate terminates:”
Revocation by the Principal
Article 1733 CC provides: “The principal may revoke the mandate at will and compel the agent to return the document establishing the mandate.” Since the mandate is a contract based on the trust the principal places in the agent, this explains the possibility of unilateral withdrawal by the principal, which takes effect once the agent is aware of it.
Issues arise when the agent has the power to contract with third parties who are unaware of the revocation, even though the agent knows about it. Article 1734 CC states: “When the mandate has been given to contract with specific persons, its revocation cannot prejudice them if they were not informed of it.” Therefore, this article protects third parties regarding the validity of acts performed by the agent only if they were unaware of the revocation. However, established case law suggests that such acts generally have full effect between the principal and third parties, without prejudice to the principal’s right to take action against the agent.
Termination by the Agent: Resignation or Incapacitation
Article 1732.2 CC allows the agent to renounce the mandate. The agent must inform the principal of their resignation. If the principal suffers damages due to the resignation, the agent must provide compensation, unless the resignation is based on the impossibility of continuing the mandate without serious detriment to the agent (Art. 1736 CC).
This power of renunciation is limited by Article 1737 CC: “The agent, even when renouncing the mandate with just cause, must continue managing affairs until the principal has been able to take the necessary steps to address the situation.”
Certain requirements apply to the agent’s resignation:
- Even if resigning with just cause, the agent must continue management after notifying the principal until the principal can take necessary steps.
- An agent resigning without just cause must compensate the principal for any resulting damages.
- The agent must notify the principal of the resignation.
Following the reform introduced by Law 41/2003 in Article 1732.2 CC, termination also occurs due to the agent’s incapacitation.
Termination by Death, Prodigality, or Insolvency
Acts performed by the agent, unaware of the principal’s death or other causes terminating the mandate, are valid and fully effective concerning third parties who contracted with the agent in good faith (Art. 1738 CC).
Furthermore, if the principal dies, the agent must conclude any business already started if there is danger in delay. If the agent dies, their heirs must inform the principal and take necessary interim measures required by the circumstances in the principal’s interest.