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Tag: POA

Power Of Attorney

What does a power of attorney cover and when does it cease to exist?

If you are temporarily unable to manage some or all of your affairs, you might want to grant a trusted family member, attorney or financial advisor the authority to do so on your behalf. In other words, you wish to grant someone power of attorney (POA). A POA allows the person you nominated (the agent) to perform juristic acts for you (the principal). There are various situations in which you might want to enact a POA, but they are limited and do expire.

Requirements to create a POA

A POA is not quite a contract. It is the legal expression of the principals will that the agent has the capacity to enter into legal agreements and make legally binding decisions for the principal. If the POA is completely valid, third parties are contracted with the principal, and the agent is protected from any liability.

A major requirement for a valid POA is the contractual capacity of the principal. In other words, under South African law, the principal has the capacity to enter the agreements he is authorising an agent to enter into. If the principal the nature and consequences of granting power of attorney, he cannot validly execute such a POA. If you, for example, do not have the capacity to understand the nature and consequences of an offer to purchase a house, you cannot grant another individual power of attorney to sign such a document on your behalf.

There are no formalities for a POA, and it can be given orally or in writing. Best practice, however, is to have a POA in writing and signed by two witnesses. The POA should also state exactly what the agent is and is not authorised to do. If the principal is a company and, more specifically, the director of a company, that individual must be authorised by the board of directors to execute a POA on the company’s behalf.   

What does a power of attorney cover?

A valid POA can cover the acceptance, amendment, and signing of any legally binding document or making important decisions. These can include decisions with regard to your finances, property, tax, entering into contracts, settling claims, renewing licenses, etc. You might want to execute a POA for various reasons including:

  • Emigration and wanting someone in South Africa to finalise your affairs here. A POA can make it easier.
  • You are leaving the country for an extended period of time.
  • You want someone with legal or financial expertise to assist and handle decisions for you.