Legal Guide

All you need to know about POA

by Saket Sharan · 4 min read

what is poa

Introduction

A POA is a formal document by which a person appoints his Attorney to do or carry out several acts and deeds for and on his behalf and in his name. This is a contract of agency. X, who gives the POA, is its Donor and is the Principal in this contract of agency. Y, the Attorney is the Donee and the Principal’s agent.

X, who stays in Delhi, wishes to sell his land situated in Pune. His friend Y stays in Pune and can manage the transaction. X finds it difficult to stay in Pune or to come often for completing the transaction. X can appoint Y to complete the transaction on his behalf. X can sign a document called a POA, appointing Y as his agent to do the needful. It is an effective instrument and facilitates transactions without the need for parties to meet in person.

It is an essential legal document that allows someone to appoint someone else to manage their property, medical affairs, or finances in their absence. 

Principal & agent 

Principal – As the creation of the document stands, the person who puts another person in charge they are referred to as the Principal or grantor. Agent – The person who has been authorized and been given powers is called the agent or power of attorney agent.

The document can have conditions that specify to what extent an agent has control and authority to make legal decisions related to the affairs of the Principal.

Meaning of POA

Power of Attorney has commonly been defined by the Indian stamp act as “any instrument which empowers any person so specified to act for and in the name of the person executing it.” An interesting thing to note here is that it is not at all essential that a person should be a lawyer for him to act as an agent for the Principal. The two laws that largely govern the power of attorney document are the laws of agency and the Indian contract act.

Kinds of POA

General POA – A general POA is a document by which the Principal appoints the agent to do on his behalf act which can be termed as general. 

The use of the term ‘general’ here marks the fact that the power given is general in terms of the subject matter. 

A general POA or power of attorney grants wide-ranging powers to agents which enable them to perform all acts concerned with a particular business or job.

Special POA – A special POA deals with a specific subject matter.

The special POA enables the agent to act in the name of the Principal. 

Rights of POA

  • The person in favor of whom the power of Attorney has been executed has been given the right to take legal action on behalf of the Principal. 
  • The agent has a right to collect income and sign essential documents on behalf of the Principal.
  • Another right that is possessed by the person is that he has the authority to make decisions in matters which the Principal has authorized him to.
  • The right to create bank accounts, make cheques or sell property also exist, and with it, do the right and duty to operate in the Principal’s best interests.
  • In case an agent has been authorized by the Principal by a health care power of attorney instrument, he then has the right and responsibility to act in the manner prescribed by the Principal according to his health care desires. So in this case, if the Principal and agent have positions opposite, the agent must act with the Principal’s wishes.
  • The agent can be allowed by the Principal to take care of various responsibilities through one or more powers of Attorney. These wide-ranging responsibilities may include things like entering into contracts, dealing with real and personal property, etc.

Limitation of POA

  • A person who has the power of Attorney is limited by the power that has been assigned to him. If the agent goes above or beyond the powers conferred, they are bound to be held responsible for any harm the Principal or others incur.
  • A power of attorney is responsible if he breaches a requirement stipulated; however, it can be excused if it was a reasonable action.
  • Another limitation of an agent is that he cannot delegate power authorized to him to another agent.
  • In case a Principal dies, the agent can no longer make any decisions financial or legal; the control is then taken over by the Executor of the Estate. 
  • Among other limitations of a power of Attorney is that they have no authority to make alterations or cause the nullification of a will that has been made by the Principal.
  • A power of attorney does not provide an agent the power to breach or bring alteration in the provisions of the nomination paperwork. And in cases where an agent does so, he runs the risk of being accused of fraud.
  • A power of attorney has to always act in the best interests of the Principal; there can be no deviation from this rule.
  • The POA also confers power on the agent until and unless the agreement is in force, and conditions will be imposed with the approval of both parties.

Execution (signing) of a POA

It is a matter of rule that a POA must be executed. Here executed means nothing else but signed by the Donor. 

A POA for completing the registration of documents under the Indian Registration Act ought to be done as follows: – if the donor is in India, the POA must be executed before and authenticated by the SubRegistrar of the place where the donor resides. – if the donor does not reside in India, it must be executed before and authenticated by a Notary, Judge, Magistrate, Court, Indian Consul, or Vice-Consul. Indian Consulates abroad provide these facilities.

Revocation Of POA

Power of Attorney can be revoked in the following cases:

1. Revoked by the Principal himself

2. The Principal dies or becomes insane or becomes bankrupt

3. The business for which the agent was appointed is over

4.  Mutually agreed upon by the Principal and agent

5. The right under the power of Attorney is renounced by the agent

Conclusion

Hence we see that power of Attorney is a convenient way for a person to delegate responsibility to someone else for ease of carrying out tasks. The laws regulating power of Attorney are wide-ranging, and a lot of different laws apply to them, like the Indian contract act, the power of attorney act, etc. 

All of which try to make sure that the rules on the power of Attorney are lucid and helpful for the people trying to avail their benefit.

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