# Limitations

> Explanation of limitations under a Power of Attorney

Source: https://wiki.powersofattorney.com/limitwhatis · Updated 2 February 2023

- [A limitation **regulates the core terms** of a *Power of Attorney*](https://wiki.powersofattorney.com/limitwhatis#a-limitation-regulates-the-core-terms-of-a-power-of-attorney)
- [Interaction between **limitations and directions**](https://wiki.powersofattorney.com/limitwhatis#interaction-between-limitations-and-directions)
- [Limitations may be used for a **wide range of purposes**](https://wiki.powersofattorney.com/limitwhatis#limitations-may-be-imposed-for-a-wide-range-of-purposes)
- [**Examples** illustrating use of limitations](https://wiki.powersofattorney.com/limitwhatis#examples-illustrating-use-of-limitations)
- [**Failure to comply** with a limitation](https://wiki.powersofattorney.com/limitwhatis#failure-to-comply-with-a-limitation)
- [Limitations **should be consistent**](https://wiki.powersofattorney.com/limitwhatis#limitations-should-not-be-inconsistent)
- [***Power of Attorney*** **must be read as a whole**](https://wiki.powersofattorney.com/limitwhatis#power-of-attorney-must-be-read-as-a-whole)

## A Limitation Regulates The Core Terms Of A *Power of Attorney*

If you review the [suggested framework](https://wiki.powersofattorney.com/strongframework#a-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](https://wiki.powersofattorney.com/introotherofficeholders#essential-officeholders-include-the-principal-and-agents), [commencement](https://wiki.powersofattorney.com/commencement#commencement-of-power-of-attorney) and [termination](https://wiki.powersofattorney.com/termmng#termination-refers-to-a-power-of-attorney-coming-to-an-end) of the *Power of Attorney*, [conditions](https://wiki.powersofattorney.com/conditions#conditions-can-be-imposed-in-respect-of-an-agents-appointment) of appointment, identification of [tasks](https://wiki.powersofattorney.com/whatcanagentdo#there-are-lots-of-examples-of-commercial-tasks) an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) may perform and similar.

By contrast, a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) acts to qualify the effect and operation of those other matters set out in the *Power of Attorney*.

## Drafting Limitations

When drafting a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle), care is required to ensure that the [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle):-

- 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](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney)*)

## Reading Limitations

When reading a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle), it is typically best to:-

- identify the core terms dealing with identification of [agents](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal), the [tasks](https://wiki.powersofattorney.com/whatcanagentdo#there-are-lots-of-examples-of-commercial-tasks) they are authorized to perform and the [term](https://wiki.powersofattorney.com/termaboutterm#term-term-of-authority-and-term-of-appointment-of-an-agent) (i.e. lifespan) of the *Power of Attorney*
- read the [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) 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](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) is entirely clear it may be open to closer scrutiny, potentially resulting in unforeseen outcomes.

## Interaction Between Limitations And Directions

[Directions](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney) and [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) serve a similar purpose, however typically speaking, many [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) might be capable of being cast in the form of a [directions](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney) and many [directions](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney) cannot be cast as [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle).

[Directions](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney) tend to be used to cover broader aspects of a *Power of Attorney* than [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle).

Interestingly, it seems most [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) may also be cast as a [direction](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney), whereas many [directions](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney) are unsuitable for casting as a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle).

## Limitations May Be Imposed For A Wide Range of Purposes

[Limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) might deal with:-

- how, when or where a certain [task](https://wiki.powersofattorney.com/whatcanagentdo#there-are-lots-of-examples-of-commercial-tasks) may be performed
- restrictions upon entitlements to [remuneration or expense](https://wiki.powersofattorney.com/agententitle#an-agent-may-be-entitled-to-remuneration-or-expenses) of an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal)
- ‘dollar limits’ with respect to certain kinds of transactions
- restrictions upon [agents](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) performing a particular [task](https://wiki.powersofattorney.com/whatcanagentdo#there-are-lots-of-examples-of-commercial-tasks)
- when an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) may accept appointment
- what records may be provided to whom and when (*for example, certain records preferred to remain confidential from certain persons*)

## Examples of Use of Limitations

There are some examples illustrating how [limitations](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney) may be used under the heading [Using Limitations To Control Outcomes](https://wiki.powersofattorney.com/ideas#using-limitations-to-control-outcomes) in this Wiki.

## Failure to Comply With a Limitation

Where a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) requires an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) to not do something, failure to comply may present grounds upon which to question the performance of an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal).

The following are sensible touchstones for anyone speculating about the consequences of an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) not complying with a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle):-

- in principle, failure to comply with a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) is capable of sounding in liability on the part of the [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) damages in respect of breach of [fiduciary](https://wiki.powersofattorney.com/terms#meaning-of-fiduciary) duty (subject for example, to any [good faith defences](https://wiki.powersofattorney.com/agententitle#defences))
- where an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) is under various [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) to take reasonable steps to do certain things and for example, one of those things is not done well and the remaining [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) are well complied with, outcomes might be different to where an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) is shown to have heeded no [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) and equally, if one [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) was plainly more significant than others and that most important [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) was not complied with, that on its own might attract jurisdiction of a Court, for example in proceedings which the performance of the [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) is in dispute.

Potentially more difficult issues may arise, for example an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) disputing that another [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) has complied with a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) or dispute as to the effect of a [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle), which may lead to Court proceedings…

## Limitations Should Not Be Inconsistent

[Limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) must not be inconsistent with other [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) or terms recorded in a *Power of Attorney*.

###### Example

Consider these two inconsistent [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle):-

|  |  |
| --- | --- |
| **Limitation 1** | My [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) 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 |
| **Limitation 2** | My [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) can only perform transactions totalling up to $1,000 a day on any of my bank accounts |

## *Power of Attorney* Must Be Read As A Whole

The only way to be certain that a *Power of Attorney* does not contain inconsistent [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) is to read the *Power of Attorney* as a whole.

For example, if a [direction](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney) and [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) 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](https://wiki.powersofattorney.com/directionwhatis#a-direction-regulates-matters-under-a-power-of-attorney) and [limitation](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) seek to qualify.

Many lawyers would recommend drafting of [limitations](https://wiki.powersofattorney.com/limitwhatis#a-limitation-qualifies-another-provision-or-principle) 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.