Commercial Transactions Notes - POWER OF ATTORNEY

POWER OF ATTORNEY
One of the situations where the law recognizes an agent as having power to
bind the principal is when the principal gives prior consent to the agents’
actions so that the agent has actual authority. A typical example of actual
authority is a Power of Attorney.
Black’s Law Dictionary defines a Power of Attorney as:

“An instrument in writing whereby one person as principal appoints another as
his agent and confers authority to perform specific acts or kinds of acts on
behalf of the principal.”
The definition goes on further to say that it is an instrument authorizing

another to act as one’s agent or attorney.
A power of attorney is therefore an arrangement by which one person called the

Donor gives another person called the Attorney or Donee authority to act on his
behalf and in his name. an instrument creating a Power of Attorney must be
executed as a Deed.
Although powers of attorney are a form of agency, they differ from commercial
agencies in one fundamental aspect:
Their purpose is to satisfy third parties that the agent has

power and the extent of it rather than to govern the relationship
between the principal and the agent.
Therefore powers of attorney are not normally made between parties.
It is often impractical to obtain execution by the attorney.
CAPACITY TO CREATE A POWER OF ATTORNEY
The rules required or relating to the capacity to appoint an attorney are the
same as those governing the capacity to enter into contract.
The general rule of contractual capacity is that a person concerned must be

capable of understanding the nature and effect of the contract at the time it is
being executed.
Regarding minors, the modern view is that whenever a minor can lawfully do
an act on his own behalf so as to bind himself, he can instead appoint an agent
to do it for him.
G (A) V G (T) (1970) 2QB 643, (1970) 3 All ER 546.
In 1964 the complainant aged 32 had intercourse with a boy aged 17 and gave
birth to a child in 1965. She wrote telling the boy about the birth but he did
not reply. She then wrote to his parents and within 12 months of the birth
received letters from them enclosing sums of money and promising to make
regular payment to maintain the child. The mothers’ letter stated that the
money was from her son. The promise to make regular payments were not
carried out.
In January 1968, the Complainant began affiliation proceedings against the

boy under the Section which allows Complaints to be brought outside the 12
month limitation period on proof that the alleged father of the child had within
12 months next after the birth paid money for its maintenance.
The boy denied paternity and the Complainant produced his parents’ letters.
It has been suggested that a Power of Attorney could be regarded as a Contract

of Service and therefore binding on a minor if it is for his benefit.
As for persons suffering from mental disorders, the law is that a Power of
Attorney executed by a Person incapable through mental incapacity of
understanding what is to be effected by executing the Deed is invalid.
PURPORTED GRANT
A purported grant is also invalid and nothing done on the strength of such a
grant is void. For this reason, it is immaterial that neither the attorney nor a
third party was aware of the donor’s mental incapacity.
COMPANIES
In relation to companies, the Board of Directors may by resolution appoint an

attorney to execute on its behalf any agreement or other instrument in relation
to any matter within the companies’ powers.
FORMALITIES FOR CREATING A POWER OF ATTORNEY
It is a necessity that an instrument creating a Power of Attorney must be

executed as a Deed by the Donor of the power and his execution of that power
must be attested by a witness.
In the alternative, another person may sign the power on behalf of the principal
at his direction and in his presence as well as in the presence of two (2)
witnesses who must attest the signature.
This alternative method can be used in situations where the Donor of the
power is unable to sign personally.
There is no mandatory requirement to register a Power of Attorney either in the

High Court or at the Lands and Deeds Registry. In practice, however, it is not
uncommon to register a power of attorney in either of these registries but more
particularly in the Miscellaneous Registry at the Lands and Deeds Registry
especially if one of the attorneys’ powers is to sale one of the Donors property.
DUTIES OF AN ATTORNEY
An attorneys’ duties are similar to those of trustees and they include the
following:
1. To act in accordance with the terms of his authority;

2. To act in the name of the Donor;
3. Not to exceed his authority;
4. To act with due care and skill;
5. Not to delegate his authority (delegates non potest delegare);
6. Not to put himself in a position where his duties as an attorney conflict
with his own personal interest or the interests of third parties;
7. Not to take advantage of his position to obtain a benefit for himself;
8. Not to accept a secret commission (Bribe);
9. To keep the Donors’ money separate from his own;
10. To account to the Donor.
A power of attorney is strictly interpreted by the Courts as giving only that

authority which it expressly confers or such authority as is necessarily implied.
ANDERSON SECURITY SYSTEMS V. ALBERT RISKY MASUKA SCZ App. No.

3 of 2002.
In this case, the Supreme Court also cited the case of BRYANT, POWIS &
BRYANT LIMITED V. LA BANQUE DU PEUPLE (1893) AC 170 – See
Particularly P. 177.
An ordinary power of attorney is also construed as to include all incidental

powers which are necessary for its effective execution – e.g. if the power is to
sale property, the attorney must obtain states consent etc.
Where it contains a list of specific acts followed by general words, the general
words are construed as being of the same kind as the specific acts (ejusdem
genris rule).
If a donor wishes to exclude this rule, he should expressly state so in the power
of attorney.
Where the operative words are clear, such words will prevail over any recitals
but if they are ambiguous, they may be controlled by the recitals.
DANBY V. COULTS & CO (1885) 29 Ch D 500.
REMUNERATION OF AN ATTORNEY
An attorney like any agent is entitled to be remunerated for his services if the
terms of his appointment expressly or impliedly provide for such payment.
If there are no express terms, he may claim remuneration on a quantum

meruit basis if the understanding was that the attorney would be remunerated.
Even if the power of attorney does not expressly provide for the attorney’s
remuneration, he is entitled to be indemnified by the donor in respect of costs
and expenses properly incurred by him in carrying out his functions. For the
avoidance of doubt, it is usually advisable to include a clause in the Power of
Attorney stating whether the attorney will be remunerated or not.
ATTORNEY’S PROTECTION
If an attorney purports to act under a Power of Attorney which has been

revoked, he will be liable for any loss incurred by the donor and that which is
incurred by a third party. However, if the attorney did not know of the
revocation of his power, he will not incur any liability either to the donor or
third party.
For an attorney to escape such liability, the act or transaction must be one
which could have been authorized but for the revocation.
PROTECTION OF THIRD PARTIES
A Power of Attorney may be revoked in the following ways:
If a third party deals with an attorney at a time when his power has been
revoked but the third party has no knowledge of the revocation, the transaction
between the attorney and the third party will be as valid as if the power had
not been revoked.
REVOCATION OF POWERS OF ATTORNEY
1. By express revocation;
2. By implied revocation;
e.g. when the donor does anything which is inconsistent with the
continued operation of the power.
3. By the donor’s death or the donor’s bankruptcy;
4. By the donor’s mental incapacity unless the power is enduring;
NOTE: An enduring power of attorney is one that survives the

mental incapacity or death of the donor.
A clause is inserted in the power of attorney in this regard.
5. By the winding up or dissolution of the corporate donor;
6. By the attorney’s death, if he is the sole attorney or one appointed to act

jointly with others. i.e. there are 2 attorneys and they are required to
“act jointly” – the death of one terminates the powers of the other.
7. By the attorney’s bankruptcy if he is the sole attorney or has been

appointed to act jointly with others;
8. By the attorney’s mental incapacity (whether sole attorney or one who

acts jointly with others).
9. By the winding up or dissolution of the corporate attorney;
10. By efflussion of time – time appointed for performance of a task lapses.
11. By fulfillment of the purpose for which the attorney was appointed;
12. By frustration of the purpose;
13. By any event which renders the agency or its objects illegal.
ENDURING POWER OF ATTORNEY

In certain circumstances, an ordinary power of attorney may be irrevocable, for
instance, where a power of attorney is expressed to be irrevocable and is given
to secure either a proprietary interest of the attorney or the performance of an
obligation owed to the attorney, then as long as the interest or obligation
remains undischarged, the power will not be revoked:
(a) By the donor unless the attorney consents;
(b) By the death, incapacity or bankruptcy of the donor or by its winding up

or dissolution if it is a body corporate.
DISCLAIMER
An Attorney may disclaim the power and cease to exercise or join in the
exercise of the power. Whether the disclaimer is effected by deed or by
conduct, it is important that notice of the same should be given to the donor of
the power as soon as possible.
TYPESOF POWERS OF ATTORNEY
1. General Power of Attorney
This power gives an agent general or full powers to act in many

transactions on behalf of the donor.
2. Specific Power of Attorney
This power gives the attorney authority to perform a specific act e.g. to
sale the donors property.
Two different specific tasks or acts may be assigned.
There is also a distinction between Ordinary Power of Attorney and an

Enduring Power of Attorney.
 The former is automatically revoked by the supervening mental

incapacity of the donor, while the latter continues to subsist and it
is normally given by the donor to secure the attorney’s proprietary
interest or the performance of an obligation owed to the attorney.
CHECKLIST FOR PREPARING A POWER OF ATTORNEY
1. The Client
Ascertain whether the client is the donor or the intended attorney – and
whether there will be a conflict in acting for both.
2. The Need for the Power
Ascertain whether the power needed is an Ordinary Power of Attorney or

it is an Enduring Power of Attorney, or a trust.
3. Donor’s Capacity
Ascertain whether the donor is mentally capable of understanding the

effect or executing of Power of Attorney and in particular whether he is
able to understand that the attorney could assume control of his
property and affairs and do almost anything which the donor could have
personally done.
4. Suitability of the proposed Attorney
 Ascertain whether the proposed attorney is too old, infirm or likely

to predecease the donor.
 Ascertain whether the proposed attorney is likely to become

bankrupt.
 Ascertain whether the proposed attorney is likely to become

mentally incapable. Bear in mind that an ordinary power of
attorney unlike an enduring power will automatically be revoked if
the donor loses mental capacity unless it is expressed to be,
irrevocable.
 Ascertain whether there would be conflicts with the donor’s family.
 Ascertain whether the proposed attorney is trustworthy and

reliable.
 Ascertain whether the donor’s relatives are happy about the

proposed appointment.

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POWER OF ATTORNEY

Black’s Law Dictionary defines a Power of Attorney as:

The definition goes on further to say that it is an instrument authorizing

A power of attorney is therefore an arrangement by which one person called the

Their purpose is to satisfy third parties that the agent has

Therefore powers of attorney are not normally made between parties.

It is often impractical to obtain execution by the attorney.

CAPACITY TO CREATE A POWER OF ATTORNEY

The general rule of contractual capacity is that a person concerned must be

In January 1968, the Complainant began affiliation proceedings against the

It has been suggested that a Power of Attorney could be regarded as a Contract

In relation to companies, the Board of Directors may by resolution appoint an

FORMALITIES FOR CREATING A POWER OF ATTORNEY

It is a necessity that an instrument creating a Power of Attorney must be

There is no mandatory requirement to register a Power of Attorney either in the

1. To act in accordance with the terms of his authority;

A power of attorney is strictly interpreted by the Courts as giving only that

ANDERSON SECURITY SYSTEMS V. ALBERT RISKY MASUKA SCZ App. No.

An ordinary power of attorney is also construed as to include all incidental

DANBY V. COULTS & CO (1885) 29 Ch D 500.

If there are no express terms, he may claim remuneration on a quantum

If an attorney purports to act under a Power of Attorney which has been

PROTECTION OF THIRD PARTIES

A Power of Attorney may be revoked in the following ways:

3. By the donor’s death or the donor’s bankruptcy;

4. By the donor’s mental incapacity unless the power is enduring;

NOTE: An enduring power of attorney is one that survives the

A clause is inserted in the power of attorney in this regard.

5. By the winding up or dissolution of the corporate donor;

6. By the attorney’s death, if he is the sole attorney or one appointed to act

7. By the attorney’s bankruptcy if he is the sole attorney or has been

8. By the attorney’s mental incapacity (whether sole attorney or one who

9. By the winding up or dissolution of the corporate attorney;

10. By efflussion of time – time appointed for performance of a task lapses.

12. By frustration of the purpose;

ENDURING POWER OF ATTORNEY

(a) By the donor unless the attorney consents;

(b) By the death, incapacity or bankruptcy of the donor or by its winding up

TYPESOF POWERS OF ATTORNEY

1. General Power of Attorney

This power gives an agent general or full powers to act in many

2. Specific Power of Attorney

Two different specific tasks or acts may be assigned.

There is also a distinction between Ordinary Power of Attorney and an

 The former is automatically revoked by the supervening mental

CHECKLIST FOR PREPARING A POWER OF ATTORNEY

2. The Need for the Power

Ascertain whether the power needed is an Ordinary Power of Attorney or

Ascertain whether the donor is mentally capable of understanding the

4. Suitability of the proposed Attorney

 Ascertain whether the proposed attorney is too old, infirm or likely

 Ascertain whether the proposed attorney is likely to become

 Ascertain whether the proposed attorney is likely to become

 Ascertain whether there would be conflicts with the donor’s family.

 Ascertain whether the proposed attorney is trustworthy and

 Ascertain whether the donor’s relatives are happy about the

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