Power of attorney (POA) is an instrument of delegation and not an instrument that can transfer interest of a subject-matter of the delegation.
A Power of attorney usually involves two parties; called the donor (also referred to as grantor or Principal) and Agent (also referred to as an Attorney in fact or Donee).
In some countries, there is readily available power of attorney forms to just fill and grant to an agent. The Donor is the giver of the power, while the donee is the receiver of the power. It is not necessary that a power of attorney be made under seal except it empowers the donee to execute a deed, and then it must be made by a Deed.
Usually, a Power of attorney is made in a Deed poll (a Deed made by one party), but there are instances where a power of attorney will be made in Deed Indenture (i.e a Deed made by two or more parties).
In some Jurisdiction, a Power of attorney (POA) should be notarized or witnessed. An agent to a Power of attorney must act in utmost good faith as he is seen to be in a fiduciary relationship with the Principal or grantor.
Types of POA:
A Power of Attorney can be express or implied, that is expressly stated or can be implied in the discharge of a duty. A power of attorney can also be general or specific.
A power of attorney that is granted to an agent to perform all duties the principal can naturally do is a general POA. While a specific POA is given to carry out a particular act e.g sale of real property.
Instances where a power of attorney is made in Deed Indenture:
1. When it imposes some obligations on the Agent or the Attorney in fact or donee).
2. It is important to have a record of the Agent’s signature to prevent fraud.
3. It is supported by consideration.
4. It is coupled with an interest and so it is desirable to be signed by both parties.
Power of attorney rights and limitations
Features of POA
- It is usually in writing: POA is usually in writing. However, a POA must not necessarily be under seal or by deed. It can also be oral but this is only acceptable in some few countries where the obligation to be enforced by the donee is simple. In most corporate institutions and transactions, eg. Banks, Hospital, Insurance firms, Property transactions, etc., in order to enforce a Power of attorney, such POA must be in writing.
- It is usually executed as a deed poll: POA is usually a Deed made by one party. It can also be made by two parties (Deed Indenture).
- It is construed strictly: POA is construed strictly and exhaustively as any extrinsic evidence cannot be admitted to establish additional powers given to the Donee not stated in the power of attorney. In a power of attorney, the general power clause does not confer any additional power to the donee so a solicitor must exhaustively list out the Donee’s powers and without ambiguity.
- It is only a person with legal capacity that can be appointed a donee: POA can only be granted to an Individual with a sound mind or incorporated body. Note that a person cannot grant a Power of attorney if they are suffering from any Illness of the mind or head. Also, once a donor is no longer of sound mind, any Power granted by a POA becomes invalid. Note that a business name or unincorporated body/Association or an Office cannot be appointed as they all lack the legal capacity. In some countries or jurisdiction, one must be 18 or above before they can be said to have legal capacity. This varies by countries.
Circumstances requiring a power of attorney
- Unavailability of the Principal/Donor: As a result of being physically away from the properties being sought to be dealt with or being engaged otherwise.
- Ill Health/Some other physical Impairment: ill health can make it difficult for the Donor/Grantor to handle his affairs in respect of the properties or affairs.
- where the expert skill of the agent is required: POA is required where the Donor requires an Agent or Solicitor where expertise is required. Eg. a Principal requiring a solicitor to take the responsibilities of putting tenants in possession, collect rent, revise rent, sue for rent etc.
- To protect the Agent: A grantor can make a POA for his Child or children to protect such child from business and workplace abuse from partners.
Revocation of a Power of attorney (POA):
This occurs when the Donor does not want the Donee or Agent or Attorney in fact (as referred to in some common law jurisdictions) to act for him any longer. This can be done expressly in writing, orally, by implication or by operation of the Law.
The form of appointment of a Donee determines the form to be used in revoking it. A higher form can be used compared to that used to create the Power of attorney. Anything otherwise, any such revocation will be invalid.
For instance, a donee/Agent appointed by a Deed (i.e. instrument under seal or executed in presence of two witnesses) can only be removed by a Deed or seal and not orally or by a mere letter.
The relationship between the Equal dignity rule and POA
This principle of law needs the authorization for somebody performing certain acts for another person to have been appointed with an equivalent formality or technicity as required for the act the representative is to perform.
For instance, if a grantor/principal authorizes someone to sell his house or building or other real property.
The law requires a contract for the sale of real property to be in writing (as required under the Statute of Frauds in U.S.A and other jurisdictions in Africa), so, the authorization or grant for the other person to sign the sales contract and deed must also be in writing.
Likewise, in some common-law jurisdictions other than the U.S., a power of an attorney to execute a deed (i.e. instrument under seal or executed in presence of two witnesses) must also be executed as a deed.
The durability of a Power of attorney
Ordinarily, a Power of attorney (POA) becomes ineffective once the Principal or Grantor became ‘incapacitated”. When is someone said to Incapacitated? This is when one is dead or when one is suffering from physical or mental illness that affects the mind.
However, the grantor or Principal can insert clauses in the letter or POA that makes such Power of attorney not to be affected by their incapacitation and the POA will endure even after such a situation. This is usually the situation in most health care Power of attorney.
What can a POA not do?
- A power of attorney cannot grant a power to Agent, the Principal or Grantor doesn’t have or cannot exercise ordinarily.
- In some jurisdiction where there are bank regulations that says a principal must be present to perform some obligations, such obligations can’t be performed by an agent granted a power of attorney.
- Also, an agent granted a power of attorney (POA) cannot further grant the same power to another person as an agent/sub-agent. This is based on the principle of law that a delegate cannot delegate.