Categories of Power of Attorney
1. General POA:
A general power of attorney is one by which an instrument is executed by the principal authorising the agent to do certain acts in general on his behalf.
The word 'General' here means that the power must be general regarding the subject matter and not general with regard to powers in respect of a subject matter. If the subject matter is not general but restricted to something either specific or specifically mentioned by the principal while drafting an instrument then it will not constitute a general power of attorney. It is otherwise called as limited power of attorney.
2. Special POA:
A special power of attorney is one by which a person is appointed by the principal to do some specified act or acts. In this type of power of attorney, an agent conferred with a power to do specific act in a single or specified transactions in the name of the principal.
Durable POA:
A Power of Attorney which specifically says otherwise, agent's power ends if principal becomes mentally incapacitated.
However, a power of attorney may say that it is to remain in effect in the event of future incapacity of the principal. A power of attorney that says this is called a durable power of attorney.
Persons Competent To Execute:
A power of attorney can be executed by any person who is competent to enter into a contract. However, married women can execute powers of attorney even if they are minors. A company while executing power of attorney must make conformity with the 'Articles of Association' and its common seal. A person must be competent to give power to the appointed person so that it will not affect the legality of the instrument/deed of power of attorney.
Authentication of Power of Attorney:
A power of attorney is a legal document that has to be properly framed, using the right legal terminology and setting out the objectives and responsibilities that you wish to authorise the appointee to carry out on your behalf. If a person wants to authorise someone to act as a power of attorney on his behalf, it must be signed_and_notarised by a certified_notary advocate, who is able to declare that you are competent at the time of signing the document to issue the said power of attorney. You will need to show your ID to the notary advocate before he/she is able to certify and issue the document. It must be executed and authenticated by the registrar or sub-registrar of assurances as per the 'Registration Act, 1908'.
Presumption About Power of Attorney:
A power of attorney is a legal written document which has more legal value and the authenticated attorney will be presumed by the court as legal document under 'QSO'.
The court shall presume that every document purporting to be a power of attorney and has to be clearly authenticate and executed before the notary or magistrate. If there is any issue arises concerning the genuineness of the attorney, then proof of its execution can be called for the verification.
Language of The Power of Attorney:
An instrument of power of attorney must always use the language known to the donor, and if the donor is an illiterate person, then scribe and identifier should explain all the contents of the document in the language known by the donor, and it has to be certified by the donor that he has understood all the contents, and then he has to put a thumb mark on the document. Lastly, the administrative officer will take the oath from the donor stating that he knows all the contents of the document and he knows the identifier. A sign and seal must be put by the administrative officer after complete verification of the document.
Original Documents To Be Verified:
A power of attorney which is accurately authenticated by the notary or any magistrate, an 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 the court will register power of attorney by putting seal and sign. It is very much essential to make the power of attorney valid.
Powers of Attorney by Two or More Persons:
A power of attorney may be executed by two or more persons jointly in favour of one or more persons, and when there are several persons as attorneys a complete authorisation in letter to be given by one of them for acting severally. A clause should be included while drafting the deed of power of attorney that all the attorneys should act jointly or separately.
Duration of Granted Power:
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. 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.
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 is usually possible when the principal dies, 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 the 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.
Registration:
A power of attorney is not compulsorily registrable unless it creates an interest in any immovable property, i.e., charge in favour of donee. Registration of power of attorney is optional where the 'Registration Act, 1908', is in force, the Power of Attorney should be authenticated by a Sub-Registrar only; otherwise, it must be properly notarized by the notary, especially where in case power to sell land is granted to the agent. If a power of attorney is in respect of an immovable property of value more than Rs100, it must be registered. Registration of power of attorney authenticates the deed of power ofattorney.
Legal Powers Which Can Be Granted To The Attorney:
Broadly speaking, a power of attorney provides an agent "all powers that the principal has" to manage the principal's financial affairs or make health care decisions may be enough for many purposes. An agent may be authorized to:
- To execute all contracts, deeds, bonds, mortgages, notes, checks, drafts, money orders.
- To manage, compromise, settle, and adjust all matters pertaining to real estate.
- To lease, collect rents, grant, bargain, sell, or borrow and mortgage.
- To sell any and all shares of stocks, bonds, or other securities.
- To file, sign all tax returns, insurance forms and any other documents.
- To enter into contracts and to perform any contract, agreement, writing, or thing to make, sign, execute, and deliver, acknowledge any contract, agreement.
- To make health-care decisions for the donor or his minor children.
- To sue on behalf of the principal.
Qualifications of An Attorney:
It is the duty of the Principal to appoint a responsible person as an 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 The Attorney Holder:
An attorney holder is a person who is authorized by the 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 authorized, 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 authorized to do so by the power of attorney.
Other Related Aspects:
Construction Rules: The general rule of power of attorney is that it should be strictly construed. Unless an express power is conferred on an agent to enter into contracts of guarantees on behalf of his principal or to execute or negotiate negotiable instruments for his principal jointly with others. An agent cannot by his acts bind the principal to a larger extent than he is empowered to do under the power of attorney. He cannot be sued or otherwise held responsible for fraud by the agent. If the power does not authorize the agent to carry on a business except with limitations any act done by him in excess of such power will not bind the principal. For example, power to dispose of property does not confer power to mortgage the property. Power to manage immovable property cannot permit the principal's ornaments which are a movable property.
Drafting of Power of Attorney:
A deed of power of attorney must be construed so as to include all powers necessary for its execution. There is no legal requirement that a power of attorney be prepared or reviewed by a lawyer. However, if important powers are going to be given to an agent, it is wise to get individual legal advice before signing a complicated form. A person who signs a power of attorney without fully understanding what it means, and without considering risks and alternatives, is asking for trouble. So a power of attorney must be drafted carefully and after knowing all its clauses written in the deed document.
Risk Involved In Granting Power of Attorney:
With a power of attorney, an agent is often entrusted with important decisions. And the agent may have access to some or all of Principal's money or other property. If the agent is not trustworthy, serious problems can result. For example, if the agent is dishonest and runs away with Principal's money, it may be difficult or impossible to get the money back. An agent is not permitted to use the principal's property for his or her own benefit unless he is expressly authorized to do so. Also, a principal will ordinarily be bound by the agent's acts (even foolish acts) and will be responsible for the agent's negligence while the agent is acting for the principal. For example, if an agent is authorized to manage your financial affairs and signs a contract to purchase something on your behalf, you will ordinarily have to pay for it, like it or not. It is obviously important to choose a trustworthy agent; if no trustworthy candidate is available, a power of attorney should not serve its purpose.
