WHAT IS A POWER OF ATTORNEY?
A power of attorney is a legal document giving someone a written permission to represent or act on behalf of another person in that person’s private affairs, business, or some other legal matters such as taking legal action in a civil matter in court. The person who makes and gives the power is known as the ‘principal’ or ‘donor’. This is because he is the one giving out or donating the power. The person who receives the power to act is known as the ‘agent’ or ‘donee’.
A power of attorney is usually created by one person who is the principal and once this has been done, the agent has the power to act on behalf of the principal. The agent’s signature is then legally recognized as if it was the principal that signed the document. Therefore, it is always advisable for the principal to choose an agent whom he trusts and who knows exactly what he wants him to do.
With a power of attorney, the agent can sign cheques, sell properties, sign necessary legal documents, make financial transactions or take any other specific action on behalf of the principal. The agent may be given either broad or limited authority to make decisions on behalf of the principal. Where the power of attorney is broad, it allows the agent to make all personal and business decisions on behalf of the principal but where it is limited, the agent can only do a specified act.
To create a power of attorney, the principal must have the required mental capacity. If he loses his mental capacity, such as having Alzheimer’s disease or a head injury in an accident, then the power of attorney will probably no longer be effective except where he specifically states that he wants the document to still be effective even where he is no longer mentally capable.
A power of attorney should clearly show:
- the name and address of the principal;
- the name and address of the agent;
- the date the power was given;
- the scope of powers given to the agent.
Normally the agent is paid for his services, which means that the principal should decide on a particular amount of money or method of paying the agent. Payment for the services of the agent is usually a separate contract from the power of attorney. It is a different contract in writing and a separate document which is kept private between them, whereas the power of attorney is intended to be shown to various other people.
If a power of attorney is given for a transaction that relates to land, the power of attorney must first be stamped and registered. This is also necessary if it is to be used as evidence in a court of law.
A power of attorney should be properly signed and witnessed. Where it is witnessed by a Commissioner for Oaths, Justice of the Peace or a Notary Public, it is assumed to have been properly drafted and witnessed. The agent however cannot be a witness to the signing of the power of attorney. The person signing the document must have the mental capacity to understand what is being signed. He must act by choice and without undue pressure from anyone.