Financial Power of Attorney - Monroe Wallace Law Firm
An express agency relationship is often created pursuant to a legal document known as a “power of attorney”. The power of attorney may create a general or. To acknowledge a deed or other instrument the maker of the instrument shall appear before an officer specified in [N.J.S.A.] and. A power of attorney is a document that gives a person (called either the which enables someone to say what they want to happen in relation to An enduring power of attorney [Powers of Attorney and Agency Act (SA).
Authority[ edit ] An agent who acts within the scope of authority conferred by his or her principal binds the principal in the obligations he or she creates against third parties.
There are essentially three kinds of authority recognized in the law: Actual authority Actual authority can be of two kinds. Either the principal may have expressly conferred authority on the agent, or authority may be implied. Authority arises by consensual agreement, and whether it exists is a question of fact.
An agent, as a general rule, is only entitled to indemnity from the principal if he or she has acted within the scope of her actual authority, and may be in breach of contract, and liable to a third party for breach of the implied warranty of authority. In tort, a claimant may not recover from the principal unless the agent is acting within the scope of employment.
Express actual authority[ edit ] Express actual authority means an agent has been expressly told he or she may act on behalf of a principal. Implied actual authority[ edit ] Implied actual authority, also called "usual authority", is authority an agent has by virtue of being reasonably necessary to carry out his express authority.
Law of agency - Wikipedia
As such, it can be inferred by virtue of a position held by an agent. For example, partners have authority to bind the other partners in the firm, their liability being joint and several, and in a corporation, all executives and senior employees with decision-making authority by virtue of their position have authority to bind the corporation.
Other forms of implied actual authority include customary authority.
This is where customs of a trade imply the agent to have certain powers. In wool buying industries it is customary for traders to purchase in their own names.Improper use of Power of Attorney
This must be no more than necessary  Main articles: Apparent authority and Estoppel Apparent authority also called "ostensible authority" exists where the principal's words or conduct would lead a reasonable person in the third party's position to believe that the agent was authorized to act, even if the principal and the purported agent had never discussed such a relationship.
For example, where one person appoints a person to a position which carries with it agency-like powers, those who know of the appointment are entitled to assume that there is apparent authority to do the things ordinarily entrusted to one occupying such a position.
If a principal creates the impression that an agent is authorized but there is no actual authority, third parties are protected so long as they have acted reasonably. This is sometimes termed "agency by estoppel " or the "doctrine of holding out", where the principal will be estopped from denying the grant of authority if third parties have changed their positions to their detriment in reliance on the representations made.
Wills J held that "the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority. It is sometimes referred to as "usual authority" though not in the sense used by Lord Denning MR in Hely-Hutchinson, where it is synonymous with "implied actual authority". It has been explained as a form of apparent authority, or "inherent agency power".
Authority by virtue of a position held to deter fraud and other harms that may befall individuals dealing with agents, there is a concept of Inherent Agency power, which is power derived solely by virtue of the agency relation.
A general power of attorney and an enduring power of attorney both give an attorney authority to deal with a person's financial affairs. However, while a general power of attorney is cancelled automatically if a person becomes legally incapacitated, an enduring power of attorney will still be effective.
Giving either power of attorney does not mean that a person loses control over their affairs. A person can still deal with whatever matters he or she chooses, while the donee can only do the things that the form allows. However, giving a power of attorney to someone who is not absolutely trustworthy is very dangerous. A power of attorney document provides proof of the donee's power to act on the donor's behalf.
Financial Power of Attorney
It must be shown whenever the donee is doing something in place of the donor. It is not always necessary to make a power of attorney to deal solely with a social security pension, and other arrangements can generally be made to use a bank account on a person's behalf without going to the trouble, and risk, of making a power of attorney.
A living will is a written statement of a person's health care and medical wishes but does not appoint another person to make health care decisions. Depending upon the jurisdiction, a health care power of attorney may or may not appear with an advance health care directive in a single, physical document. For example, the California legislature has adopted a standard power of attorney for health care and advance health care directive form that meets all of that state's legal wording requirements for a power of attorney and advance health care directive in a single document.
This power may be used to allow a spouse or family member to manage the grantor's affairs in case illness or injury makes the grantor unable to act. As the result of privacy legislation in the U. Determining whether the principal is "disabled" enough to initiate this type of representation is a formal process.
Power of attorney and apparent authority in an agency relationship
Springing powers of attorney are not automatic, and institutions may refuse to work with the attorney-in-fact. Disputes are then resolved in court. Unless the power of attorney has been made irrevocable by its own terms or by some legal principle, the grantor may revoke the power of attorney by telling the attorney-in-fact it is revoked.
However, if the principal does not inform third parties and it is reasonable for the third parties to rely upon the power of attorney being in force, the principal might still be bound by the acts of the agent, though the agent may also be liable for such unauthorized acts.
Standardized forms[ edit ] Standardized forms are available for various kinds of powers of attorney, and many organizations provide them for their clients, customers, patients, employees, or members. However, the grantor should exercise caution when using a standardized POA form obtained from a source other than a lawyer because there is considerable variation in approved formats among the states. Implied limitations on agent's power[ edit ] Although a power of attorney grants the agent powers to perform acts in the absence of the grantor, the POA cannot grant powers to the agent that conflict with rules and regulations governing people and companies that the agent deals with.
For example, if a bank has regulations that require the grantor to be physically present in the bank to perform certain actions, the POA cannot grant the agent power to perform those actions in the absence of the grantor. Proxy voting[ edit ] Robert's Rules of Order notes that proxy voting involves granting a power of attorney.
The term "proxy" refers to both the power of attorney itself and the person to whom it is granted. This rule also applies to principals who instruct their brokers to perform certain specific trades and principals who trust their brokers to perform certain trades in the principal's best interest. This can be done either for a pre-defined period of time, or in perpetuity "enduring".