POWER OF ATTORNEY

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POWER OF ATTORNEY

In today’s fast moving world where our economy has diversified roles to play, there is a need for entering into an agreement in relation for the business and other transactions to easily conduct our daily life

Synopsis:

Introduction

Meaning

The Power of Attorney Act, 1882

Importance of Power of Attorney

Different kinds of Power of Attorney

Points to note for Power of Attorney

Duties of an Attorney

Revocation of Power of Attorney

Legal Duties of an Attorney

Introduction:

In today’s fast moving world where our economy has diversified roles to play, there is a need for entering into an agreement in relation for the business and other transactions to easily conduct our daily life. As man became busier it became more and more necessary for him to depend on others for getting his things done. The hectic activity of a person has made the need of power of attorney for delegating his functions. A ‘Power of Attorney’ is a legal solution where one can perform his work through the help and assistance of other trusted and appointed person. This process involves drafting of a document which the principal assigns to another person the power to act as their legal representative.

    In the Black’s Law Dictionary, the Power of Attorney is defined as: the instrument by which a person is authorized to act as an agent of the granting it. It is pertinent to mention here a person needs not to be a lawyer to hold a Power of Attorney as an agent for someone else.

Meaning:

Power of Attorney means to give an authority through a document by one person, (donor/ principal), who gives authority to another person (donee/ agent) to act on his behalf. The power of attorney is also can be given by two or more persons jointly to one or more persons. Here, the parties contract a legal authority to take all required decisions when the principal is not able to present or to sign on occasion of his illness, disability and if the principal is living on other place etc.

The Power of Attorney Act, 1882:

    This Act came into force on May, 1882. The main objective of passing this Act was to easily regulate and appoint the attorney or agent who will execute all work on behalf of the principal on areas such as finances, property, tax, insurance, contract, shares, and stocks etc.  

Importance of Power of Attorney:

One can appoint some person which he can trust him to perform all his actions on his behalf in his absence due to the reasons like: ill health, any legal disability, living in some other place which is very far from the actual place etc. for the works like: signing business contracts, buying and selling of shares, bonds, real estate property, etc, filing tax, insurance, etc.

Different kinds of Power of Attorney:

1. General PoA

2. Special PoA

3. Durable PoA

General Power of Attorney: The general PoA is an agreement issued by the principal to do his work on his behalf to an agent. In this PoA, the general powers can be given only to the agent. But here one can not get confused between the terms of general powers and general subject matters; it should be noted here that only the general powers are given here to the agent by restricting some subject matters on the draft. It is also known as the limited power of attorney.

Special Power of Attorney: In this PoA, the principal appoints an agent to perform some specific work in a single or specified number of transactions which are listed in the draft.

Durable Power of Attorney: In this PoA, the principal specifically mentions that if he becomes in the state of mentally incapacitated, the agent will become unauthorized to do any work and the agreement of PoA will be suspended for that particular period of time. But in the future, if the principal gains his mind back, the agreement will come into force and the same agent will now be in the first position to perform all the tasks of the principle.

Points to note for Power of Attorney:

1. Competency of Principal to do PoA- The principal should be competent to enter into a contract as given under the Indian Contract Act u/S. 5. Whereas, in case of a company or an entity, it should perform it with its Common seal and confirms it with Article of Association. The parties must be competent enough to make PoA so that in future it should not affect the legality of the agreement of PoA.

2. Authentication- In the Indian laws, the PoA is an agreement of legal instrument which has to be framed in proper legal terms while mentioning its motive, and the responsibilities which a principal is giving to its agent to perform on his behalf. 

It should be notarized by a notary advocate specifying the capacity and reason of both the parties by presenting their legitimate ID proofs to certify and issue the document.

Once the document is drafted, it is executed and authorized by the Registrar under the Registration Act of 1908.

3. Original documents which are verified- The PoA is authenticated by the notary or any magistrate, n affidavit has to be filed with all the original documents of the power of attorney authorising an agent to do certain acts. All the documents will be verified by the court and then court will register power of attorney by putting seal and sign. It is very much essential to make the power of attorney valid.

4. Qualification of an individual as an Attorney- It is the duty of the Principal to appoint a responsible person as agent who should act with utmost good faith. An attorney is a person who has been appointed by the donor to act on his behalf. An ideal attorney is that who must be willing to act in that capacity and he has to be impartial having integrity. An attorney should be loyal to the donor and should not disclose any confidential matters related to the business.

Duties of an Attorney:

An attorney holder is a person who is authorised by donor legally. An attorney must not exceed the authority given under the power of attorney. If the attorney does exceed their authority, he or she may be liable for any damages suffered by the donor or others. The attorney may, however, do all those acts which are authorised, but only by a particular method, if the power of attorney so indicates. If there is a breach of any condition by the attorney then he shall be liable to the donor except in a case where he has acted reasonably. If there is some doubt as to the wording of the power of attorney, a solicitor should always be consulted. The attorney holder must also act towards the donor with the utmost good faith and tell the donor the nature and extent of any interest which may conflict with his or her duty. An attorney may pass on his or her powers and duties to another person but only if authorised to do so by the power of attorney

 Duration of Power of Attorney:

Duration of the power will depend upon the type of the attorney or there may be a fixed period of power granted by the principal which must be included in the deed.A general power of attorney remains in force unless expressly revoked or determined by the death of either of the party. A special power of attorney will be in force until the specified act is not completed. 

Revocation of Power of Attorney:

A power of attorney may be revoked at any time by the principal or donor by giving a written notice to the agent, unless it is for a particular fixed period. Revocation usually possible when principal dies or becomes insane or becomes bankrupt. The principal himself can revoke power of attorney if the business for which the agent was appointed is over as mutually agreed upon by the principal and agent. In case if principal has named a spouse or registered domestic partner as his agent, his or her authority to act under the power of attorney is automatically terminated in the event of divorce, legal separation or termination of the registered domestic partnership.

Legal Duties of an Attorney:

i. To execute all contracts, deeds, bonds, mortgages, notes, checks, drafts, money orders.

ii. To manage, compromise, settle, and adjust all matters pertaining to real estate.

iii. To lease, collect rents, grant, bargain, sell, or borrow and mortgage.

iv. To sell any and all shares of stocks, bonds, or other securities.

v. To file, sign all tax returns, insurance forms and any other documents.

vi. To enter into contacts, and to perform any contract, agreement, writing, or thing to make, sign, execute, and deliver, acknowledge any contract, agreement.

vii. To make health-care decisions for the donor or his minor children.

viii. To sue on behalf of the principal.