If you review the suggested framework for a Power of Attorney you will see that a Power of Attorney consists of various parts, including provisions dealing with identification of various officeholders, commencement and termination of the Power of Attorney, conditions of appointment, identification of tasks an agent may perform and similar.
By contrast, a limitation acts to qualify the effect and operation of those other matters set out in the Power of Attorney.
When drafting a limitation, care is required to ensure that the limitation:-
- does not offend applicable legal principles
- has a clear meaning
- does not conflict with other terms recorded in the Power of Attorney (including any other directions)
When reading a limitation, it is typically best to:-
- identify the core terms dealing with identification of agents, the tasks they are authorized to perform and the term (i.e. lifespan) of the Power of Attorney
- read the limitation as intended to qualify those matters
- remember that every Power of Attorney is different and should be read as a whole
Giving meaning and effect to the terms of any legal document is an art for lawyers.
Unless the meaning of a limitation is entirely clear it may be open to closer scrutiny, potentially resulting in unforeseen outcomes.
¶ Interaction Between Limitations And Directions
Directions and limitations serve a similar purpose, however typically speaking, many limitations might be capable of being cast in the form of a directions and many directions cannot be cast as limitations.
Directions tend to be used to cover broader aspects of a Power of Attorney than limitations.
Interestingly, it seems most limitations may also be cast as a direction, whereas many directions are unsuitable for casting as a limitation.
Limitations might deal with:-
- how, when or where a certain task may be performed
- restrictions upon entitlements to remuneration or expense of an agent
- ‘dollar limits’ with respect to certain kinds of transactions
- restrictions upon agents performing a particular task
- when an agent may accept appointment
- what records may be provided to whom and when (for example, certain records preferred to remain confidential from certain persons)
There are some examples illustrating how limitations may be used under the heading Using Limitations To Control Outcomes in this Wiki.
Where a limitation requires an agent to not do something, failure to comply may present grounds upon which to question the performance of an agent.
The following are sensible touchstones for anyone speculating about the consequences of an agent not complying with a limitation:-
- in principle, failure to comply with a limitation is capable of sounding in liability on the part of the agent damages in respect of breach of fiduciary duty (subject for example, to any good faith defences)
- where an agent is under various limitations to take reasonable steps to do certain things and for example, one of those things is not done well and the remaining limitations are well complied with, outcomes might be different to where an agent is shown to have heeded no limitations and equally, if one limitation was plainly more significant than others and that most important limitation was not complied with, that on its own might attract jurisdiction of a Court, for example in proceedings which the performance of the agent is in dispute.
Potentially more difficult issues may arise, for example an agent disputing that another agent has complied with a limitation or dispute as to the effect of a limitation, which may lead to Court proceedings…
Limitations must not be inconsistent with other limitations or terms recorded in a Power of Attorney.
Consider these two inconsistent limitations:-
|My agent can only perform transactions totalling up to $1,000 a day on my bank account number #))0011-4576-22, if a qualified accountant has confirmed in writing they agree the excess transactions are in my best financial interests
|My agent can only perform transactions totalling up to $1,000 a day on any of my bank accounts
The only way to be certain that a Power of Attorney does not contain inconsistent limitations is to read the Power of Attorney as a whole.
For example, if a direction and limitation are inconsistent, this would not be apparent unless the whole of the Power of Attorney had been read, probably in conjunction with the effects of the other terms of the Power of Attorney that the direction and limitation seek to qualify.
Many lawyers would recommend drafting of limitations and related provisions in a Power of Attorney be done by a lawyer, given their impact effects and need to be appreciated as part of the whole terms.