The basics

What Is A Power of Attorney?

What is a Power of Attorney?

Updated 20 June 2023 · 6 min read

This page examines common definitions and their shortcomings and includes a better definition of what is a Power of Attorney.

This page discusses the importance of detail in a Power of Attorney and their common features, as well as the worrying trend of using government forms.

The contents of this page are focused upon Powers of Attorney for commercial purposes.

Common Definitions Of A Power of Attorney

A Power of Attorney is:

"..an instrument in writing by which one person as principal, appoints another as his agent and confers upon him authority to perform certain specified acts or kinds of acts on behalf of the principal.."¹

"..a formal instrument by which one person empowers another person to represent him, or act in his stead for certain purposes.."²

Shortcomings Of Common Definitions

The common definitions above fail to recognise that:-

• the concept of a "person" where it appears in these definitions is not limited to a person, it includes a body corporate (e.g. a trust, partnership, corporation etc.)
• more than one person may together, be principals either jointly or severally
• more than one agent may be appointed under a Power of Attorney
• a Power of Attorney may be created orally, although most Powers of Attorney are recorded in writing
• a Power of Attorney may either be:-
  • used to authorize the performance of specific tasks
  • general in nature, authorizing the performance of any task that the principal could perform for themselves

These shortcomings highlight the inadequacy of common definitions.

A Better Definition Of What Is A Power of Attorney

A Power of Attorney is a convenient legal instrument able to be used by any kind of legal entity to establish a scheme to assign tasks, variously or otherwise, to a chosen agent or chosen agents.

Through the terms of their Power of Attorney, the principal can prescribe how the scheme is to work, dealing with issues like:-

• who may replace an agent who is ineligible
• what tasks may be performed by an agent and when an agent may perform those tasks
• whether an agent can authorize anyone else (i.e. sub-agents to perform tasks they are themselves authorized to perform

The proposed agent or agents are at liberty to elect whether or not to accept appointment as an agent, upon the terms set out in the Power of Attorney.

If the proposed agent or agents decide to accept appointment, upon accepting appointment they are bound by a fiduciary duty owed to the principal, which requires them to put the interests of the principal first at all times, being a central feature of a Power of Attorney.

Importance of Detail In Power of Attorney

Omitting necessary detail from a Power of Attorney comes at the peril of the principal.

For example, the absence of suitable words in a Power of Attorney dealing with the following kinds of issues would present difficulties:-

• whether or not an agent or successor agent can appoint a sub-agent
• whether an agent who became ineligible and was replaced by successor agent and subsequently became eligible again, is entitled to resume office as an agent
• what is to happen if a protector identified certain successor agents and a dispute arises as to priority of appointment between the nominated successor agents and successor agents named in the Power of Attorney
• how things are to work if overlapping tasks are assigned to different agents
• how things are to work if multiple agents are appointed to act by agreement and less than all of them are eligible

The right words in a Power of Attorney can solve all of these problems.

What Are Common Features Of a Power of Attorney?

A Power of Attorney identifies an agent or various agents and the tasks they may perform and may also include terms that:-

• assign tasks to be performed differently, by one or more agents, by agreement, majority or independently
• identify successor agents or a protector being someone authorized to name additional successor agents
• authorize an agent or successor agent to appoint sub-agents or delegates
• record conditions either in respect of an individual or a class of officeholders.
• define how an agent may accept appointment or resign
• require an agent to perform the tasks they are authorized to undertake
• define incapacity by reference to performance of the tasks specified in the Power of Attorney
• impose a positive duty to act upon the agents
• identify successor agents or a protector to deal with risks associated with an agent being ineligible
• include risk management provisions to reduce the likelihood of a Power of Attorney being misused

Surprisingly, none of these arrangements are included in government forms.

Without access to these kinds of features, creating a complete and personal solution using a Power of Attorney is not possible.

Kinds of Power of Attorney

A Power of Attorney may be commercial, non-statutory non-durable, non-statutory durable, non-statutory, non-durable, durable, statutory, military, legislative, contractual, oral, irrevocable, general, limited, special, specific, springing, temporary or ordinary, entirely depending upon its terms.

Worrying Trend Of Using Government Forms

The prolific use of very short Powers of Attorney in the shape of government forms is a worrying trend.

It is benign to suggest that government forms do an effective job of ensuring that disputes involving a Power of Attorney do not reach Court. Most likely, the lack of detail in government forms has the opposite effect.

Government forms are inflexible and generic.

In Florida and Pennsylvania, there is no government form, although the use of varieties of Powers of Attorney that resemble a government form is likely.

The problems associated with using government forms prevail in both durable and other settings.

Without using a better Power of Attorney, a user cannot impose a genuinely unique and effective management scheme, tailored to their specific needs and circumstances.

Without more detail than appears in a government form, almost everything about the scheme a Power of Attorney imposes is open to debate, leaving the user to throw themselves upon a Court, if questions arise.

Absent detail in any Power of Attorney can easily result in a Power of Attorney being less than fit for purpose.

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