Abstract:

A contract of mandate, as a model of“acting on behalf of others,”is characterized by a nonadversarial interest structure between the mandator and the mandatary. A conflict of interest arises in a contract of mandate when the mandatary’s personal interests conflict with those of the mandator, resulting in the mandator not achieving the optimal benefits they could have expected. The Civil Code of the People’s Republic of China does not explicitly address conflicts of interest in contracts of mandate, necessitating clarification through legal interpretation. Normatively, conflicts of interest should not be subsumed under the duty of care or the scope of authority. Essentially, a conflict of interest constitutes a breach of the mandatary’s duty of loyalty and should be subject to Article 509, Paragraph 2 of the Civil Code regarding special fiduciary duties, and Article 919 concerning the duty of performance. In terms of legal remedies for conflicts of interest, generally, various levels of remedies such as compensation for losses, termination of the contract of mandate, and refusal to transfer the effectiveness of management actions can be employed. In special circumstances, when the mandatary obtains benefits exceeding the mandator’s actual losses due to a breach of the duty of loyalty, a purposive expansion of Article 927 of the Civil Code should be applied, based on the inhibitory theory of legal policy, to achieve the actual effect of disgorging profits.

Key words: the contract of mandate, conflicts of interest, duty of care, duty of loyalty, disgorgement of , profits