Power of Attorney

By Aditya Singh Raghav

---

Power of attorney is a legal document of agency which gives power to a party to appoint an agent to do and execute certain acts and deeds on his or her behalf. It can also be defined as a written authorization document where a person (Principal or Donor) gives authority to another person (Attorney, Agent or Donee) to act on their behalf, as their legal representative, in matters of property, finance, banking transactions, business affairs etc.

The Indian Stamps Act defines it as “any instrument empowering any specified person to act for and in the name of the person executing it.” According to Power of Attorney Act 1882, power of attorney “includes any instruments empowering a specified person to act for and in the name of the person executing it.

 

Power of attorney is of following types:

 

General Power of Attorney

Principal authorizes the Attorney to do general acts. This general power is regarding the subject matter. Some of the examples of a General Power of Attorney are as:

1. Contract Agreements – to enter into contracts, to perform any contract, agreement or writing, to make sign, execute and deliver any agreement
2. Buying and selling property
• To sell, exchange, lease, collect rents, grant, bargain, or borrow and mortgage
• To execute all deeds, bonds, contracts, mortgages, notes, drafts, money order
• To manage, compromise, settle and adjust all matters relating to real estate
3. Bank accounts, Certificates of Deposit (COD) and Money Market Accounts(MMA)
• To add or withdraw any amounts from bank account, COD and MMA
• To make, execute, endorse, accept and deliver any and all cheques and drafts
• Execute and release deeds of trust or other security agreements
• Deposit and withdraw funds, acquire or redeem certificates of deposit

Other powers can be related to business field:

1. Power to enter into, negotiate and sanction contracts and any other expense
2. To erect, construct, enlarge, improve, alter, maintain, pull down, rebuild or reconstruct and buildings, factories, offices, workshops or other structures necessary for the purpose of business of the company

 

Special or Limited Power of Attorney

Under this power of attorney, the agent has specific powers limited to a certain area. It confers powers to the agent to act for specific purposes and the power ceases to exist once the particular transaction is over. An example of Special Power of Attorney is:

To appear before the DA, Collector or any other concerned authority in respect of the said flat for the conversion of the leasehold rights into freehold rights, to apply for the conveyance deed, give applications, to file the affidavits, give declarations for and on behalf and to deposit the charges and to present the documents for registration of the said flat.

 

Durable Power of Attorney

It means that the power of attorney remains effective if the principal becomes mentally incapacitated. If this durable condition is not mentioned in the agreement, then the power of attorney is nullified when principal becomes mentally incapacitated. Such power of attorney can be used in following circumstances:

1. When a person is unwell and is not in a position to carry out important transactions
2. A person living abroad wants to appoint a person to assist in domestic business
3. When an aid is required to assist in important matters

 

Registration of Power of Attorney

It is not mandatory to get a power of attorney registered unless it creates an interest in any immovable property. In India, registration is not necessary and such power in respect of immovable property valuing more than INR 100 has to be registered.

 

Capacity of Principal or Grantor to give Power of Attorney

The grantor or the principal has to be mentally fit to grant a power of attorney. If the principal becomes mentally unfit after granting the power, then the authority is no longer valid except under following conditions:

1. When clause of durable authority is mentioned in the agreement to enable the attorney to carry out the activities when the principal becomes mentally unfit
2. If a person is already mentally unfit and no durable power has been given, then the only option left for the attorney is to act on his behalf when the court imposes guardianship.

 

Duties of Power of Attorney Holder

1. The authority to act on behalf of the principal should not exceed the limit of authority. If the person who has been given the power of attorney exceeds such limit then they would be liable for the damages suffered by the principal or grantor.
2. The attorney holder is required to do only the acts mentioned in the agreements and in a specific manner if there is mention of doing a work in particular method.
3. An attorney can pass their powers and duties to another person only if they have been given the power to do so by the grantor.
4. If the attorney has not acted reasonably in carrying out an act, then they would be liable for any breach of condition.
5. Fraud by the attorney does not make the principal liable.
6. If the power authorizes the attorney to carry on a business but with limitations, then any act done by attorney beyond the specified power doesn’t bind the principal.

 

Revocation of Power of Attorney

A power of attorney can be revoked under following circumstances:

1. When principal revokes it
2. When the principal dies or becomes insane or bankrupt
3. The business matter for which attorney was appointed is over
4. When such right is renounced by the agent
5. When mutually agreed between the principal and the agent

 

General power of attorney becomes irrevocable if such power carries any interest in subject matter. Facts of each case and the words in the legal document determine whether such power is coupled with any interest or not.

Under revocable power of attorney, the principal has right to revoke the power at any time and the agent can no longer act on the principal’s behalf. However, if there is grant of Irrevocable Power of Attorney (IPOA) then such power is not revocable at the will of the principal as the principal has given up the right of revocation or indicated in any of the provisions that the power is irrevocable. Irrevocable power of attorney is rarely used.

If the power is revocable then the parties cannot make it irrevocable merely by mentioning that the power is now irrevocable.

 

Like every coin has two sides, power of attorney also has some disadvantages along with advantages

Advantages

• Granting power of attorney is a very cheap process. All the agreements are done in easy language and with less paperwork.
• Power of attorney can be granted to family members and they can act as very trusted agents due to already established good relations.

Disadvantages

The major disadvantage in granting power of attorney is abuse of power from the agent who is an outsider or can also be the family member. Such abuse of power may make the principal liable in certain circumstances. Also there is no direct control over the agent which may result in abuse of power.

 

---

Aditya is a 2^nd year law student at National Law University Delhi. An adventurous person, he actively participates in sports activities and loves to go trekking. He is a football fan and you can easily find him discussing football matches with his friends. His interests include Commercial Law, Constitutional Law, Criminal Law and Competition Law.