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Use of Power of Attorney (POA) Documents

Use of Power of Attorney (POA) Documents

Individuals are frequently involved in commercial transactions and arrangements but, for various reasons, they will often be unable or not wish to enter into such transactions or maintain such arrangements in person. For example, at the time when they have to sign a document or take some action in relation to such a transaction or arrangement, the individual may not be available, perhaps due to illness or absence on holiday. In such cases, the individual may appoint another individual as its agent to sign or act on their behalf, in order to enter into a transaction or other arrangement.

Where, rather than an individual, a corporate (e.g. company) or partnership entity enters into or establishes or maintains a commercial transaction or arrangement, it may wish to have an individual to act for it as its agent. Such an agent might be an officer of the corporate entity or a member of the partnership, a solicitor or other professional appointed by it or some other individual that it chooses to appoint for the purpose.

Depending on the particular transaction or arrangement in which the individual or corporate or partnership entity is involved, the agent may be appointed in a relatively informal manner, e.g. by means of a letter or simple written agreement. However, there are certain situations where it will not be sufficient to appoint an agent in such an informal way. For example, it might be because the law does not recognise that means of appointment as adequate to create valid legal authority in the circumstances. In such a case, the action taken by the person who is the purported agent could be entirely void and of no effect in law. Another example would be a situation where, although the proposed informal appointment would be legally valid, the other party to the transaction or arrangement will not accept it and that party requires greater formality. 

In cases where more formality is needed, the individual or corporate or partnership entity appointing the agent might need to appoint its agent by means of a formal document. The usual type of formal agency appointment used is a “power of attorney” (often referred to in short as a “POA”). It is granted by the individual or other entity to a person who is to be their “attorney” (i.e. their agent). The following pages explain key aspects of power of attorney documents.

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