Special power of attorney lets an agent or attorney represent another.
A special power of attorney, also known as a limited power of attorney (LPOA), permits an individual to delegate authority to another person to make legal or financial decisions on their behalf.
Workings of a Special Power of Attorney
Power of attorney is a set of rights listed in a single document that enables a principal to act on behalf of a third party in the performance of legal or financial decisions.
It is a type of contract that not only certifies the appointment of an agent but also outlines the kind and scope of the agent’s power.
An agent might be designated to carry out both the act of transferring the title to the third party and the execution of the contract for the sale of the property, for instance.
If the principle is unable to make choices on their own for a variety of reasons, a special power of attorney is frequently used. The principal has the option to designate various agents in each by issuing more than one of them.
Roles and duties of an agent are restricted to particular situations. The obligations of the agent are established by the express and implied terms of the two parties’ contract.
Depending on the scope of the agreement, the agent may be held accountable for a variety of duties outside of those specified in the contract.
Duties of an Agent to the Principal
The written and implied terms of any agreement between the two parties govern the contractual obligations of an agent to the principal.
Principle chooses an agent based on skills, abilities, and integrity because the agent may also be responsible for other obligations.
Agent is given possession of money and other assets in addition to being qualified and enabled to make binding agreements with other parties on behalf of the principal. In order to achieve this, the agent may hurt the principal by being dishonest or careless.
As a result, an agent owes the principal the fiduciary obligations of diligence, duty of disclosure, duty of good faith, duty of obedience, good faith, and loyalty.
An agent will ultimately be held responsible for any losses incurred by the principal if they violate these obligations or go beyond the scope of their power.
The damage brought on by the third party is not the responsibility of an agent operating within the scope of the power granted to him by the principal, however.
In connection with this, the principal may also consent to the agent’s appointment of a substitute sub-agent to assist in the performance of the contract’s obligations.
Different Kinds of Special Powers of Attorney
There are several sorts of powers of attorney, which allow principals to appoint agents to manage their affairs in the event of commitments or other extenuating circumstances. Each sort of power of attorney is based on a principal’s current situation.
Limited Power of Attorney
The limited power of attorney is a written declaration made by the principal to the agent for a specific transaction and for a specific amount of time. Once the transaction is finished or the principal becomes incapable, the limited power expires.
Medical Power of Attorney
The aforementioned contract gives an agent the authority to decide crucial medical matters on the principal’s behalf. Following the presiding physician’s approval, the contract goes into force right away.
Springing Power of Attorney
In the event of a specific circumstance that renders the principal incapable of acting, the springing power of attorney document takes effect at a later date.
General Power of Attorney
An agent may handle all aspect of the principal’s business thanks to a general power of attorney. The contract takes effect upon the principal’s incapacitation and is in force until the principal’s death because it has no time limit.
Drafting a Special Power of Attorney: Requirements
The credentials of both the principal and the agent must be filled out when drafting a special power of attorney.
The authors of the document are required to provide a detailed description of the authorized acts of transactions and the required deadlines.
If the special power of attorney is executed abroad, it must be notarized by presenting before a notary public in order to ensure that the instrument was not executed under duress.
Principal must also provide a reliable form of identification with his or her picture and signature. All parties sign copies of the document, and witnesses sign it as well.
Considerations for a Special Power of Attorney
The agent is deemed to act on behalf of the principle, his inability to commit himself by contract does not preclude him from entering into a legally binding agreement.
For this reason, any person or entity that is capable of acting, such as companies, partnerships, or associations, may function as an agent.