Court of Cassation Ruling on Apparent Mandate Theory

Extract

[...] However, as the Court of Cassation recalls, in order for the theory of apparent mandate to be retained, it is essential that the third party be in good faith. In fact, Article 1998 of the Civil Code provides that 'the agent engages the principal when his act exceeds the powers conferred upon him, unless the third party knew this limitation'. Thus, the Court of Cassation, in this judgment, clearly and precisely affirms that it is necessary for the contracting third party to believe legitimately in the powers of the alleged agent. [...]

[...] It is on this basis that the Court of Cassation established the presence of a legitimate belief in this case without it being necessary to rule on the absence of fault of the principal A. The establishment by the Court of Cassation of the presence of a legitimate belief In accordance with the grounds of the Court of Cassation person can be engaged on the basis of an apparent mandate when the third party's belief in the powers of the alleged agent has been legitimate' In fact, the Court of Cassation notes here that the theory of apparent mandate was validly retained by the Court of Appeal, the conditions of the latter being fulfilled. [...]

[...] In this sense, the Court of Cassation's ruling of November goes even further than the ruling in this case by establishing a presumption of apparent mandate, which lightens the burden of proof for the third party. The legal security established by this ruling reaches a level that is all the more important, which shows that the entire jurisprudence of the Court of Cassation in this matter is largely in favor of protecting third parties. B. A decision illustrating the imbalance of this theory to the detriment of the mandators In its ruling, the Court of Cassation admits that «a person can be engaged on the basis of an apparent mandate when the third party's belief in the powers of the alleged mandatary was legitimate, this character supposing that the circumstances allowed the third party not to verify the said powers ». [...]

[...] This perfectly illustrates the decision of the Commercial Chamber of the Court of Cassation dated 9 March 2022 on the theory of apparent mandate. In this case, the SCI Océanis Promotion recently sealed a unilateral promise of sale for several plots of land intended for the construction of residences, with the intervention of the SARL Cofimo as an intermediary. A neighbor having threatened to contest the building permit that had been granted, the Océanis promotion company signed with him a protocol agreement providing for the payment of a transactional indemnity of 60,000 euros. [...]

[...] Thus, even in the presence of a mandator in good faith, the theory of apparent mandate makes no distinction and these mandators find themselves in a compromising situation and therefore without protection. It is possible to point out the absence of equity of the Court of Cassation in these rulings. Thus, it may be necessary to consider a rebalancing of the theory of apparent mandate in order to avoid the decline of transactions and commercial relationships in the face of a fear of mandators. [...]