Notes Chapter 5 - Patrice Blais PDF

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Patrice Blais...

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Chapter 5 : Mandates I.

Mandates

A.

Definition of mandate (article 2130) Contract by which a person, the mandator, empowers another person, the mandatary, to represent him in the performance of a juridical act with a third person, and the mandatary, by his acceptance, binds himself to exercise the power. “The Power of Attorney”. e.g. Ask someone to buy milk with $10. Ask a lawyer to represent you at the court. B. Characteristics of mandate 1. Objective  Representation for legal acts (2130)  Protection due to incapacity (2131) 2. Formation (art. 2132)  Express OR tacit (acts or silence) 3. Remuneration (art. 2133)  If mandate is between 2 natural persons = presumed done for free  Professional mandate (accountant, lawyer, etc.) = presumed onerous (paid) 4. Scope  Special mandates – for a specific business (2135) o E.g. Mandate to sell house, car, etc.  General mandates – for all business but simple administration (2135) o E.g. Mandate for accounting of business, HR, etc.  Express + inferred powers also (2136) o I ask you to sell my house in Montreal because I move to my condo to Florida. You are allowed to remove the snow, clean the house, allows visits, etc.  Professional mandates – inferred (2137) o Same powers as above

II. C.

OBLIGATION BETWEEN PARTIES Mandatary Obligations (art. 2138-2148) 1. Perform properly (art. 2138)  Prudently & diligently  Honestly & faithfully (loyalty)  No conflict of interest – Acceptance of many mandates (2143) o E.g. If a couple want to divorce and they agree on everything, you may represent both. If they start disagreeing, you must represent only one. You must also inform each other that you are representing both. o E.g. You’re the manager of the HR department in a firm. There is an open position for computer programmer. Your brother is looking for a job. You are in the conflict of interest when see someone positively or negatively (subjective). If a reasonable person would look at the hiring process and see a conflict of interest, it means there is a conflict of interest. If you tell your superior that your brother is applying, your boss might take over the hiring or either ask you to do the hiring objectively. o Systemic conflict: The governors at the House of Commons have no one above them. They set their own salaries. It is a conflict of interest. The solution is using utmost transparency.

5. Keep informed (2139) 6. Personal performance  Perform in person unless authorized (2140)  Appoint 3rd person in urgency (2140 part 2) o Mandatory responsible for 3rd party acts (2141)  Assistance (2142) o Assistant remains liable to mandator for acts o Do not need authorization to ask for assistance o If mandator does not allow assistance, it must be mentioned in letter of mandate 7. Exercising powers  If many mandataries = they must all act jointly + solidarily (2144)  If you exceed your mandate, you are responsible unless it was advantageous (2145) 8. Benefit from mandate  May not use information or property from mandate (2146) o Except if mandatary consents, law allows or mandate orders  May not use 3rd party to benefit from mandate (2147) 9. Liability  10.   D.

III. E.

Set by law above, but can be reduced if gratuitous mandate (2148) Closing of mandate Render account + return property (2184) Deduct + retain property until payment (only if mandator still owes you money) (2185)

Mandator Obligations (art. 2149-2156) 1. Cooperate  Help mandatary complete mandate (2149)  Advance expenses + interests (2150, 2151) 11. Pay (2150)  Even if mandate not successful, it’s not mandatary’s fault (2155) 12. Liability to mandatary  If several mandators, there has to be solidarity toward mandatary (2156)  Once work completed, mandator must discharge the mandatary (2152)  If mandatary suffered any injuries during mandate, mandator is liable (2154)  Not liable to mandatary for acts outside mandate except (will be liable): o If mandator approves the action outside the mandate (2152 part 2) o Mandatary did not know mandate ended (2152 part 2) o Acts is advantageous (2153)

OBLIGATION TOWARDS 3RD PARTY Mandatary Obligations (art. 2157-2159) 1. Mandator liable for acts/agreements (2157)  Except if mandatary acts in own name (pretend as if acting without mandator)

13. 

Personally liable if exceeds mandate (2158) Except if: o Mandator ratifies (it’s ok even if you acted outside mandate) o 3rd party knew limits of mandate (3rd party is liable if know the mandate limits)

Disclose identity of mandator (2159) If mandator wants to remain anonymous and the mandatary doesn’t reveal the identity of mandator once the contract is done, their personal liability is at risk. Identity of mandator had to be revealed at some point. F. Mandator Obligations (art. 2160-2165) 1. Mandator liable for acts (2160) 15. May repudiate substitutes and acts (2161) 16. Liable for acts after end of mandate (2162)  Were necessary  If 3rd party did not know mandate ended 17. Liable for presumed mandatary (2163)  Possibility to be held liable if someone is led to believe A is a mandator 18. Liable for injuries (2164) 14. 



IV. G.

CASES Case 5.2: Dowell v. Hay-Ellis (notary) 1. Case Facts  Joseph in bankruptcy protection  Dowell acts as front man to buy property for $15K  Dowell mandates Joseph to manage property (Joseph= mandatary of Dowell)  Money is set up in trust account managed by Ellis  Joseph goes to Ellis and says “pay this, that, here’s an invoice”. Ellis blindly signed off on every invoice from Joseph  Dowell claims $69k in non-property related payments 19.     

H.

Except if outside mandate/own name

Court Decision Dowell was only front man But remained liable to creditors Found payments of unverified invoices Ellis actions contradict art. 2138 Ellis was not prudent or diligent as mandatary (notary)

Wong v. Leung 1. Case Facts  Pak Sang Investments mandates Leung to manage a 15-unit apartment building  Mandated to collect rent, pay expenses and submit accounting reports  Leung failed to deposit collected rents and pay gas bill  Building was seized and sold to pay gas bill  Remaining funds sent to Pak Sang in care of Leung who produced a fake letter with these directions

Questions Has there been any breach of mandate by Leung? o Yes, Leung failed to provide timely accountings, send collected rent and pay ongoing expenses. Also, he allowed the building to be sold at a sheriff’s sale and kept the proceedings without informing Wong. These would constitute grounds for termination of the contract of mandate. o The Wong sisters had high trust in Leung because he is the son-in-law of previous manager, was recommended by previous manager and previous manager said he would mentor Leung. Wong sisters also knew Leung as church-going person and leader within church. They believed in him because he was an experience and well-known real estate agent. o Leung deceived them by telling Wong sisters the accounting is being prepared, but never sent them.  Is Plaintiff Company entitled to damages? If so, what damages? o The damages caused were intentional and it is the fault of gross negligence by Leung. Wong sisters are entitled to direct and immediate damages (art. 1613). 2 types of damages: the building AND the net unpaid rent. o Pak Sang is entitled to damages sufficient to permit the repurchase of a similar building as of March 2007 when Leung effectively terminated the contract. The direct damages are $500,000 had Pak Sang owned 100% of the building, but they owns 37.5%, which is 187,592.65$.  What about the claim for lost profit on the rent? o Wong earned 15,000$ net per year after expenses for rent collected in the building. No rent was paid between 01/2020 and 03/2007, so the unpaid rent for the period is 93,750$, which is owed to Pak Sang by Leung.  Are the individual plaintiffs entitled to any damages from Leung? o Ms. Rebecca is entitled to damages for $2,000 as a result of her having to fly from Hong Kong to Canada for court. Nothing is owed to Ms. Wendy. Ms. Rebecca is entitled to damages of $3,500 for aggravation of health (stress).  Do the Defendant Mr. Ho & Corporate Defendant have any legal liability to Pak Sang for the cheque of 182,168$? o No, he is a victim as well. 21. Court Decision  Leung failed on duty of: o Prudence, diligence, honesty and faithfulness (art. 2138) o Providing information (art. 2139) o Not using mandatory property for personal benefit (art. 2146)  Leung failed the mandate “principle of confidence” the mandatory has in the mandatary  Confidence is heavier when mandatory is more vulnerable due to lack of experience and understanding  Ordered payment for building and rent: see amounts in bold. Dowell vs. Notary Hay-Ellis (p. 64) 20. 

Joseph: bad credit Dr. Dowell: good credit, so owns building for Joseph Notary Hay-Ellis: not paying attention to pay-outs for building maintenance

$

J has money, can’t go bankrupt or lose his money, so “Sells” building to

J gets money from Notary for upkeep of building

(J really owns it, but looks like Dr owns it on paper)

Facts

Question Ratio

Decision

 Dr worried about paying for his insurance, etc. so gives mandate to J to pay for mortgage (from Dr’s money held with notary)  Dr says your mandate is to make sure only administration us done  But J spends money (released by Notary) without heeding his mandate  Notary releasing money to J because notary says it’s really J’s money  Dr says it doesn’t matter, Notary’s mandate was to give money to J to pay for administration 1. Was notary guilty of not [2138] exercising prudence and diligence for his [2130] mandate from the Dr? 1. Argument: notary says it’s really J’s money, so he could release the Dr’s funds to J whenever J wanted. [p. 68, last sentence] Notary must exercise his duties with “prudence and diligence.” Answer: Notary’s mandate was to release Dr’s money only for building expenses, so notary was not diligent when releasing funds to J for amounts that clearly weren’t for the building Notary guilty, has to pay improperly paid out funds back to Dr : 68,549.79$

How the notary could have protected himself from liability in this situation (p.69):  Notary didn’t make attempts to verify what Joseph was doing with the money, didn’t request invoices for the cheques he gave to Joseph  Thus notary fell “far short” of the standard of conduct required by law as an agent  Had the notary required invoices, and checked them over even briefly, he would have noticed they were not for the building maintenance; then he would have not paid out the money/ stopped paying out the money, fulfilled the conditions of his mandate, and not been liable The doctor had given money to the notary – who was supposed to disperse it for expenses related to the sale of commercial property. Notary knows that the money he’s holding is not really the doctor’s but joseph’s. Mandate is a façade....