Professional work and signed mandates
Many professionals perform commercial assignments or mandates for their clients in exchange for professional fees.
Such professionals should sign mandate letters or forms with their clients.
Examples of professionals who need signed mandates
Such professionals include legal practitioners, accountants, auditors, tax advisors, estate agents, professional valuers of assets, valuers of companies and shares, engineers, architects, corporate finance advisors, environmental management consultants, data protection advisors, IT specialists, etc.
Mandate
This is essentially a contractual document between the professional and the client. It can be called by other names such as engagement letter, letter of appointment, etc.
The mandate can be in the form of a letter or a designed form or a standard document depending on professional standards and practice.
The key contents of a mandate document are summarised below:
letterhead, if possible.
Title of the mandate
The appointment
Tenure
Description of professional services
Applicable standards, eg audit standards, valuation standards, etc.
Professional fees or how they are to be determined
Key contact people
Dispute resolution mechanism
Address for service
Signature by the professional
Confirmation through signature by the client.
Some of the key provisions are explained below.
Letterhead
It is advisable and common to find a mandate on the professional or client’s letterhead.
Date
Like any other contracts, the mandate has to have a date.
Title of the mandate
This makes it clear what the mandate is for. In some situations a professional might enter into different specific mandates with the same client.
The appointment
This part is very important, it states that the professional is being given the mandate by the client to offer certain professional services in exchange for professional fees.
Tenure
The tenure of the appointment has to be clarified. It can be from one date to another or until the assignment or mandate is completed.
Description of the professional work
The exact work to be carried out by the professional must be described, for example, debt collection by a legal practitioner, marketing of a certain property by an estate agent, capital raising by a corporate finance expert, tax advisory services, valuation of assets, valuation of companies or shares, architectural designs, account work, audit work, etc.
Applicable standards
Standards applicable to the assignment can be stated. These may be auditing standards, valuation standards, etc. Standards may also apply to the minimum skills of the professional.
Professional fees
This part is key as it can easily lead to disputes. The fees have to be agreed upon either as an amount or how they will be determined in future such as charges per hour. It is also important for parties to agree on how the fees will be paid.
Dispute resolution
Disputes can be resolved through mediation, arbitration or litigation.
Address for service
This is important for purposes of communication or in the event of litigation.
Signature of the professional
At the end of the document the professional has to sign off the mandate letter or contract document.
Confirmation through signing by the client
Space should be provided at the end of the mandate letter or contract for the client to sign binding himself/herself/itself to the terms and conditions of the engagement. A signed copy should be kept by the professional.
Advantages of signed mandates
Signed mandate letters or forms define rights and obligations of the parties. This is helpful in regulating their engagement or in the event of disputes. Disputes are usually on professional fees or performance standards.
Conclusion
Professionals who provide professional commercial services to their clients in exchange for fees are encouraged to enter into and sign mandate letters or forms with their clients.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
-herald
