With a simple mandate, the mandatee undertakes to carry out the assigned business or services in accordance with the contract. The contract can generally be terminated at any time. However, termination at an inopportune juncture may give rise to a liability for damages.
Scope of the Simple Mandate
Mandates involve a service provided by the mandatee. Typical mandate relationships relate to the services of liberal professions, including:
- Doctor
- Lawyer
- Accounting services
- Banks
Distinguishing the Mandate from other Contracts
Contracts for work that are not classified under any other type of contract (in particular, employment contracts and contracts for services) are considered mandates (art. 394 para. 2 CO).
Mandates are distinguished from contracts for work primarily by the fact that a result is owed in a contract for work, while an activity is to be performed in a mandate. Distinguishing between the two can be difficult, and mixed contracts also occur (e.g., architect contract: mandate relationship with regard to construction management, contract for work with regard to drawing plans).
Employment contracts are distinguished from mandate relationships in that the mandatees themselves determine the execution of the mandate and carry out the mandate using their own means. Contractors are not involved in the organization of the principal. Difficulties in distinguishing between the two can arise, particularly for self-employed individuals, with regard to social insurance and tax classification.
The Federal Court considers advice and information provided gratuitously and non-professionally as non-contractual actions and not as mandates (BGE 111 II 471, sect. 2; BGE 112 II 347; BGE 127 III 328).
Issuing a Mandate
Form
Mandates can be given orally or in writing. A written contract is recommended for evidentiary purposes.
Conclusion without Express Acceptance
If the mandator or principal provides services by virtue of an official appointment (e.g., court-appointed defense counsel) or provides them professionally and publicly recommends them (e.g., doctors, lawyers, dentists, architects, trustees, etc.), the mandate is considered accepted if it is not immediately rejected (art. 395 CO). The rejection must be made within a reasonable period.
Remuneration of the Mandate
Mandates can be concluded with or without compensation. Remuneration must be paid if it is agreed upon or customary (art. 394 para. 3 CO).
Claiming services that are typically provided for a fee entitles the mandatee to compensation.
Obligations of the Mandatee
Contractual Performance
The mandatee is obliged to perform the mandate in accordance with the contract (art. 394 para. 1 CO). In the absence of a specific agreement, the scope of the mandate and thus the obligations of the mandatee are determined by the nature of the business to be carried out (art. 396 para. 1 CO).
Contractual performance includes the legal acts that are necessary for this purpose (art. 396 para. 2 CO).
The mandatee requires special authorization to conclude settlements, accept arbitration, incur liabilities in bills of exchange, sell or encumber real estate, and make gifts (art. 396 para. 3 CO).
Instructions from the Mandator
The mandatee is bound by the instructions of the principal (art. 397 para. 1 CO).
The mandatee may deviate from the instructions if obtaining the client’s consent is not feasible due to the circumstances and it can be assumed that the client would grant consent (art. 397 para. 1 CO).
Unlawful or immoral instructions do not need to be followed (BGE 124 III 253). If the client’s instructions are not feasible or inappropriate, the mandatee must inform the client and seek further instructions (BGE 108 II 197).
Duty of Care of the Mandatee
The mandatee must perform the mandate with due care, applying the same diligence as an employee (art. 398 para. 1 CO in conjunction with art. 321a to art. 321e CO). Professionals are expected to possess the necessary skills and knowledge, which requires a higher standard of care. The circumstances of each individual case are always decisive (see, for example, BGer 4C.72/2004, sect. 3.1; BGer 4C.80/2005, sect. 2.2.1).
Personal Execution and Substitution
The mandatee is authorized to delegate the execution of the task to a third party (substitution) if:
- They have been authorized to do so by the client.
- They are compelled to do so by the circumstances.
- Substitution is generally considered permissible.
In all other cases, the mandatee must personally carry out the task (art. 398 para. 3 CO).
Incapacity of the Mandator
If it is foreseeable that the mandator will become permanently incapable of judgment, the mandatee is obliged to notify the Child and Adult Protection Authority (KESB) at the client’s place of residence if it appears necessary to protect the client’s interests (art. 397a CO).
The notification to the KESB will generally be made cautiously, as it is not easy to predict whether a client will become incapable of judgment, whether this condition will be permanent, and it is also difficult to assess whether notification is necessarily in the specific individual case in the client’s interest.
Accountability
The mandatee is required to provide an account of the execution of the task to the mandator and must hand over everything received as a result of fulfilling the mandate (art. 400 CO). This includes retrocessions (see BGE 137 III 393).
Duties of the Client
The client is obliged to pay the agreed-upon or customary fee to the mandatary (art. 394 para. 3 CO).
Furthermore, the mandator is obligated to reimburse the mandatee for expenses and disbursements incurred in the proper execution of the mandate and to release them from any obligations incurred (art. 402 CO).
Liability of the Mandatee
If the mandatee fails to perform the task with due care, resulting in damage to the client, the mandatee is liable for the incurred damage (art. 398 para. 1 CO in conjunction with art. 97 CO). In the case of negligent performance of the mandate, the fee may be reduced, but the portion of the mandate performed in accordance with the contract must be remunerated in full (see BGE 124 III 423).
Liability of the mandatee for simple negligence can be waived (art. 100 para. 1 CO).
If the mandatee employs substitutes, he is responsible for the careful selection and instruction of the substitutes (art. 399 para. 2 CO).
Transfer of Acquired Rights
If the mandatee has acquired claims against third parties in his own name but for the account of the mandator, those claims pass to the client as soon as the client has fulfilled all obligations arising from the mandate relationship (art. 401 para. 1 CO).
If the client fulfills his or her obligations arising from the mandate relationship, the acquired rights automatically transfer to his or her (legal assignment). This also applies to the bankruptcy estate of the mandatee if he or her were to become bankrupt (art. 401 para. 2 CO).
If the mandatee has acquired movable property for the client, the client can demand the return of the property from the bankruptcy of the mandatee, retention rights in the bankruptcy reserved (art. 401 para. 3 CO).
Termination of the Mandate Relationship
Fulfillment
In the case of individual mandates, the mandate ends upon fulfillment of the task without further ado. However, it is different for mandates intended for a continuous duration.
Termination and Revocation
Mandate relationships that are intended for a continuous duration (e.g., a banking relationship) continue until termination by the parties. In these cases, termination occurs through termination or revocation (art. 404 para. 1 CO). Termination is initiated by the mandatee, while revocation is initiated by the mandator. Termination and revocation can be informal unless otherwise specified in the contract. For evidentiary purposes, it is recommended to provide written notice of termination or revocation. A reason for termination or revocation is neither required nor must one be provided.
The unrestricted right of revocation for both parties is a fundamental characteristic of a simple mandate. Due to the special relationship of trust in mandate relationships, this provision is mandatory, and any contractual deviation is not binding. The agreement of a penalty clause to circumvent the unrestricted right of revocation is not permissible.
Inopportune Termination
If termination or revocation occurs at an inopportune juncture, the party withdrawing from the contract is obligated to compensate the other party for the damages resulting from premature termination (art. 404 para. 2 CO).
Termination is considered untimely when the dissolution of the contract occurs at an unfavorable time for the other party and causes them particular disadvantages. It may be relevant whether the other party has given justified cause for the termination (see BGEs 110 II 380 and 109 II 157).
The liability for damages extends to the negative interest regardless of fault. Loss of profit can be claimed if the mandatee can prove that they rejected other remunerated mandates during that time. The quantification of damages through a penalty clause is permissible as long as it does not have a punitive character (see BGE 109 II 462 para. 4).
Other Termination Grounds
The mandate ends without further ado if one of the following events occurs with regard to the mandator or the mandatee, unless otherwise agreed (art. 405 para. 1 CO):
- Death
- Incapacity
- Bankruptcy
- Declaration of disappearance
If the termination of the mandate jeopardizes the interests of the mandator, the mandatee, their heir, or their representative is obliged to continue the business until the mandator, their heirs, or their representative are able to do so themselves (art. 405 para. 2 CO).
The continuation of the mandate relationship beyond one of the events specified in art. 405 para. 1 CO can be agreed upon. The establishment of the mandate in the event of one of these events can also be agreed upon.
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