The Law and Economics of the Civil Law of Mandate

Abstract

This article seeks to clarify the economic rationale for the civil law of mandate, corresponding in the common law to the law of agency, but restricted to acts of legal representation by the agent. Earlier literature suggested that it can be explained as an attempt to counter collusion, or alternatively through the general least-cost avoider logic. The principal difficulty in agency relationships is with supervision. This suggests opportunism as an explanatory factor. We examine the particular features of opportunism that would distinguish it amongst the sources of transaction costs: importance of disclosure rules, presumptions to facilitate evidence in cases of possible covert opportunism, need to sanction covert acts more severely than readily observable ones. The rules of mandate can comfortably be accounted for in the anti-opportunism logic. Most of them fit, equally comfortably, in the more general and straightforward cost-avoidance logic.