Definition
A mandate refers to a written authority granted by one party, known as the mandator, to another party, referred to as the mandatory, to act on the mandator’s behalf. This delegation of authority allows the mandatory to perform specific actions or make decisions for the mandator.
Types of Mandates:
- Banking Mandate: This comprises instructions to a bank for opening an account, managing the account, and providing specimen signatures of authorized signatories.
- Legal Mandate: In legal terms, this could involve giving power of attorney or other legal powers to an individual to act in legal capacities on behalf of the mandator.
Examples
Example 1:
An individual provides a written mandate to their financial advisor, authorizing them to manage their investment portfolio. This mandate includes specific instructions on asset allocation and investment strategies.
Example 2:
A company provides a banking mandate when opening a new corporate account. The mandate includes detailed instructions on how the account should be operated and lists the authorized signatories who can process transactions on behalf of the company.
FAQs
What is the main purpose of a mandate?
A mandate’s primary purpose is to allow one party (the mandatory) to act on behalf of another (the mandator) in various situations such as financial, legal, or administrative activities, ensuring that decisions and actions are taken as per the mandator’s wishes.
Can a mandate be revoked?
Yes, a mandate is typically revocable until acted upon. It may be withdrawn by the mandator at any time before the mandatory acts upon it. Additionally, a mandate generally ends upon the death, mental illness, or bankruptcy of the mandator.
Does a mandate need to be documented formally?
Yes, mandates usually need to be documented formally to clearly define the authority being delegated and to avoid any misunderstandings. This documentation is essential for legal and practical purposes, especially when dealing with financial institutions or legal matters.
What happens if the mandator dies or becomes bankrupt?
A mandate usually ends upon the death or bankruptcy of the mandator. This ensures that the authority granted does not extend beyond the lawful capacity of the mandator.
Can a mandate be specific or general?
Yes, mandates can be both specific and general. A specific mandate covers particular tasks or decisions, whereas a general mandate provides broader authority across various activities or decisions.
Related Terms
Power of Attorney
A legal document authorizing one person to act on behalf of another in legal or financial matters.
Proxy
An authority to act on behalf of another, especially for voting purposes in meetings.
Delegation
The assignment of responsibility or authority to another person to carry out specific activities.
Fiduciary Duty
A legal obligation to act in the best interest of another party. For example, a trustee or an agent must act in the best interest of the beneficiary or principal.
Online Resources
- Investopedia: Understanding Power of Attorney
- Nolo: What Is a Proxy?
- American Bar Association: Fiduciary Duties
Suggested Books for Further Studies
- Power of Attorney and Other Agency Instruments by Deborah Scroggin Garrett
- The Law of Agency by Howard Bennett
- Financial Regulation and Supervision: A Post-Crisis Analysis by Eddy Wymeersch, Klaus J. Hopt, and Guido Ferrarini
Accounting Basics: “Mandate” Fundamentals Quiz
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