In most of the Six (6) Greater States an agent can demand a third party do business with an agent
A third party enforcement regime operates in five of the Six (6) Greater States
Third parties are given certain rights and protections
The statutory grounds to refuse to deal with agents are similar in the Six (6) Greater States
Legislation in some of the Six (6) Greater States obliges a third party presented with a Power of Attorney to do business with the agent as representative of the principal.
Such schemes permit a third party presented with a Power of Attorney to request a written opinion prepared by a lawyer confirming that the Power of Attorney is valid, an affidavit confirming relevant factual matters and invariably require a third party to do business with an agent upon receipt of any properly requested information and documents, unless specific reasons exist to refuse.
The extent to which these rights exist varies from state to state.
None of the Six (6) Greater States have created these kind of rights in respect of Power of Attorney created by a commercial entity, which are unregulated by legislation in the the Six (6) Greater States.
Consider for example, what might be said to be the most important aspect of the legislation, being the requirement for a third party to accept a Power of Attorney, unless certain grounds for refusal are established.
If it be accepted that access to a third party enforcement regime permitting an agent to go to Court if a third party improperly refuses to accept a Power of Attorney would be a good reason to use a government form
for commercial purposes created by a person
if we look at the question of whether a :-
The following extract from the 1994 California Law Revision Commission Report which led to enactment of Division 4.5 of the Probate Code is informative, speaking of law as it was prior to the amendments and proposed changes (footnotes are in brackets):
Existing law provides a number of rules concerning the relation between attorneys-in-fact and third persons, both in the general agency statutes70 and in the power of attorney statutes.71 These rules protect attorneys-in-fact and third persons without knowledge of some event that would terminate the power of attorney or the authority of the attorney-in-fact. An attorney-in-fact’s lack of knowledge of revocation or termination by death or incapacity may be formalized by the giving of an affidavit — the affidavit is deemed conclusive proof of the facts at the time it is given.72 A third person may be compelled to accept the authority of an attorney-in-fact under a statutory form power of attorney to the same extent as the principal could compel the third person to act.73 The proposed law continues these principles of existing law, but adds several additional rules intended to make powers of attorney more effective. The proposed law sets forth a general duty on the part of third persons to accord the same rights and privileges with respect to the interests of the principal as if the principal were personally present and acting.74 In order to facilitate compliance with this duty, the proposed law protects a third person acting in good faith and protects the third person in relying on the representations of the attorney-in-fact. The attorney-in-fact’s affidavit is broadened and made more effective in the proposed law. The affidavit may be given voluntarily or in response to the request of a third person. A third person who is given an affidavit and refuses to accept the exercise of the attorney-in-fact’s authority covered by the affidavit will be liable for attorney’s fees in any judicial proceedings necessary to confirm the attorney-in-fact’s authority. The proposed law also adds new provisions recognizing the right of third persons to require appropriate identification from the attorney-in-fact75 and specifying when a third person who conducts activities through employees is charged with knowledge that would deprive the third person of statutory protections from liability.76
70. See, e.g., Civ. Code §§ 2342 (warrant of authority), 2343 (agent’s responsibility to third persons), 2355(a) (effect of notice on termination), 2356(b) (effect of lack of knowledge of termination of authority on bona fide transactions).
71. Civ. Code §§ 2403 (effect of death or incapacity of principal), 2404 (affidavit of lack of knowledge of termination of power), 2510(c) (good faith reliance in absence of required warning statement), 2512 (protection of person relying in good faith on durable power of attorney).
72. See Civ. Code § 2404.
73. Civ. Code § 2480.5. See Recognition of Agent’s Authority Under Statutory Form Power of Attorney, 22 Cal. L. Revision Comm’n Reports 965 (1992).
attorney more effective. The proposed law sets forth a general duty on the part of third persons to accord the same rights and privileges with respect to the interests of the principal as if the principal were personally present and acting.
74. This provision is drawn from the Missouri Durable Power of Attorney Law. See Mo. Ann. Stat. § 404.710(9) (Vernon 1990).
75. This provision is drawn from the Missouri Durable Power of Attorney Law. See Mo. Ann. Stat. § 404.719(4) (Vernon 1990).
76. The information must be received at a home office or place where there is an employee who is responsible for acting on the information and the employee has a reasonable time within which to act in light of the procedure and facilities available to the third person in the regular course of its operations. This provision is drawn from the Missouri Durable Power of Attorney Law. See Mo. Ann. Stat. § 404.719(3) (Vernon 1990).
The 1994 California Law Revision Commission Report also provides in respect of §4406:
"Section 4406 is not found in the Uniform Statutory Form Power of Attorney Act (1988). Subdivisions (a) and (b) are drawn in part from Section 13105(b) (compelling payment or delivery under affidavit procedure for collection or transfer of personal property of small estate). See also Section 4305 (affidavit of lack of knowledge of termination of power of attorney). Subdivision (a) permits an agent to bring an action to compel a third person to honor a statutory form power of attorney only to the extent that the principal, disregarding any legal disability, could bring an action to compel the third person to act. Under this rule, a third person who could not be forced to do business with the principal consequently may not be forced to deal with the agent. However, a third person who holds property of the principal, who owes a debt to the principal, or who is obligated by contract to the principal may be compelled to accept the agent’s authority. In addition, as provided in subdivision (b), if the refusal to deal with the agent is found to be unreasonable, the third person will also be liable for attorney’s fees incurred in the action to compel compliance. The determination of reasonableness depends on the particular circumstances of each case. A person to whom the power of attorney is presented may, for example, act reasonably in refusing to accept the agent’s authority where it is not clear that the power of attorney grants the agent authority with respect to the particular transaction. Likewise, a third person may reasonably refuse to honor the power of attorney if, for example, the person is not reasonably satisfied as to the identity of the agent or has information that would lead a reasonable person to question the validity of the power of attorney. See also Section 4303 (protection of person relying in good faith). Subdivision (c) provides some specific guidelines as to the meaning of the reasonableness rule in subdivision (b) as it relates to the liability for attorney’s fees. However, subdivision (d) makes clear that an institution’s preference for its own power of attorney form is never a reasonable ground for refusing to accept the authority of an agent under a properly executed and effective statutory form power of attorney."
NOTE: FIX ‘ATT IN FACT’ TO READ AGENTS, CAPITALISE P OF A - ALSO DO FOOTNOTES IN FIRST BIT
Preventing a principal from varying third party rights in a Power of Attorney seems reasonable, given that a third party is not a party (i.e. does not sign) the Power of Attorney, that is, a third party is not asked to agree to its terms.
It is arguably compelling to prevent variation of third party rights by a principal in states where a third party enforcement regime operates, because the third party may be compelled to do business with an agent on those terms.
The rights of a third party seem largely incapable of being varied in a Power of Attorney in five (5) of the Six (6) Greater States (Illinois being the exception).
In Illinois, §2-4 provides (bold added):
“The principal may specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent and to all persons dealing with the agent, and the provisions of the agency will control notwithstanding this Act.” §2-4
Perhaps the reason that Illinois has not included a third party enforcement regime in its legislation is because in Illinois:
§2-4 (cited above) entitles a principal to dictate "rights, powers, duties, limitations, immunities and other terms" with respect to third parties in respect of a Power of Attorney (§2-4)
a third party (being not a party to the Power of Attorney) does not agree to be bound by its terms
it is not appropriate to enable a principal to dictate "rights, powers, duties, limitations, immunities and other terms" with respect to third parties in respect of a Power of Attorney and then potentially be able to enforce those terms, that is, thrust them upon a third party who has not agreed to them
In Texas, similar to California and New York, a difficulty arises because access to the third party enforcement regime is restricted.
In Texas, the third party enforcement regime is only available where the principal has created a Power of Attorney that is durable, although unlike California and Texas it is of no consequence whether a government form is used.
For any person in Texas seeking to access the third party enforcement regime it would be possible to create a Power of Attorney that:-
Such a Power of Attorney seems to satisfy the definition of a durable Power of Attorney in Texas if it contained words to the effect that “this Power of Attorney is unaffected by my subsequent incapacity” about which there may be issues addressed elsewhere in this Wiki, however if the word “unaffected” be construed to mean that the Power of Attorney is intended to continue to operate whether or not the principal has capacity, there appears to be a genuine basis to suggest that the third party enforcement regime could be accessed in respect of such a Power of Attorney.
It might be prudent to ensure that the ‘durable tasks' are not of such a minor nature as to result in quibbling about the ‘genuineness’ of the Power of Attorney, one strategy involving for example the authorizing of a very substantial task in circumstances where the principal lacks capacity, subject to severe and onerous limitations.
In all of the Six (6) Greater States except Illinois, there is legislative provision that works in effect to require an agent upon request from a third party to provide an opinion from Counsel, Affidavit, translation or similar.
Having received all such information or documents, a third party is obliged to notify in writing any refusal to accept the Power of Attorney, identifying their reasons for refusal.
The right of a third party to request verifying documents, Affidavits and similar is provided for in legislation in conjunction with protection of a third party from any dispute in which it is suggested the agent lacked authority to perform any particular transaction.
The statutory grounds upon which a may refuse are different in each state.
In Texas, §751.206 provides this somewhat comprehensive account:
By contrast, in Florida §709.2120 provides:
(4) A third person is not required to accept a power of attorney if:
(a) The third person is not otherwise required to engage in a transaction with the principal in the same circumstances;
(b) The third person has knowledge of the termination or suspension of the agent's authority or of the power of attorney before exercising the power;
(c) A timely request by the third person for an affidavit, English translation, or opinion of counsel under s. 709.2119(4) is refused by the agent;
(d) Except as provided in paragraph (b), the third person believes in good faith that the power is not valid or that the agent does not have authority to perform the act requested; or
(e) The third person makes, or has knowledge that another person has made, a report to the local adult protective services office stating a good faith belief that the principal may be subject to physical or financial abuse, neglect, exploitation, or abandonment by the agent or a person acting for or with the agent.