20 Jun

Introduction / Characteristics of a Power of Attorney / Who Can Grant Powers of Attorney / Types of Powers of Attorney / Who Can Act as an Attorney / Revoking a Power of Attorney / Form of Grant of Power of Attorney / Execution by Power of Attorney / Conclusion 

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A power of attorney (PoA) is highly useful in commercial transactions for several reasons:

  1. Facilitating Contracting Process: In commercial transactions, there may be situations where a party is unable to personally sign or execute documents.  A PoA allows the appointment of an attorney to act on behalf of the party, ensuring that necessary documents are executed in a timely manner. 
  2. Absence of Authorised Signatory: In some cases, a company or individual may not have an authorized signatory available to execute important documents. By granting a PoA, the absence of an authorized signatory can be covered, allowing the attorney to act on behalf of the company or individual. 
  3. Delegating Authority: A PoA enables the delegation of authority to enter into contracts, make decisions, or perform specific acts on behalf of the donor. This delegation can be particularly useful when managers or authorized agents need the authority to act on behalf of a company or individual in commercial transactions.
  4. Flexibility and Convenience: Granting a PoA provides flexibility and convenience in commercial transactions. It allows parties to appoint someone they trust to act on their behalf, even in their absence, ensuring continuity and efficiency in business dealings.
  5. Legal Representation: A PoA ensures that the attorney has the legal authority to represent the donor in commercial transactions. This helps establish the attorney's credibility and authority when dealing with third parties, providing assurance and confidence to all parties involved.
  6. Compliance with Legal Requirements: Certain commercial transactions may require specific formalities or legal requirements for execution. By granting a PoA, parties can ensure compliance with these requirements, avoiding any potential legal issues or disputes.
  7. Time and Cost Efficiency: Having a PoA in place can save time and costs associated with delays caused by the unavailability of authorized signatories or the need for multiple parties to physically sign documents. The attorney can act promptly on behalf of the donor, streamlining the transaction process.

It is important to note that the specific usefulness of a PoA in commercial transactions may vary depending on the nature of the transaction, the parties involved, and the legal requirements of the jurisdiction. Consulting with legal professionals is recommended to ensure the appropriate use and effectiveness of a PoA in specific commercial scenarios.  

This article provides practical guidance on the characteristics of a power of attorney, who can grant and act as an attorney, revocation of a power of attorney, the form of grant, and execution by an attorney.  

Characteristics of a Power of Attorney:  

A power of attorney is a deed that grants one party (donor) the power to act on behalf of another party (donee or attorney) within the terms specified in the document.  

The attorney's authority is limited to the terms of the power of attorney, which can be general or limited to specific acts and purposes.  Powers of attorney are subject to legislative rules outlined in the Powers of Attorney Act 1971, Mental Capacity Act 2005, Trustee Act 1925, and the Trusts of Land and Appointment of Trustees Act 1996.  

Who Can Grant Powers of Attorney:  

Any person with capacity can delegate powers to act on their behalf through a power of attorney.  Powers of attorney must be executed as a deed.  

Types of Powers of Attorney:  

General Powers of Attorney: These are commonly used in commercial transactions and authorize the attorney to perform any lawful act on behalf of the donor.  

However, they do not cover personal matters specific to the donor's special status.  Lasting Powers of Attorney (LPAs) and Enduring Powers of Attorney (EPAs): LPAs and EPAs are not revoked by the mental incapacity of the donor.  

LPAs grant rights to attorneys to make decisions regarding the donor's financial affairs and health and welfare requirements.  

Who Can Act as an Attorney:  

Individuals or commercial entities with legal identity, such as companies or limited liability partnerships, can act as attorneys.  

Attorneys must have mental capacity (for individuals) and not be restricted by their governing document (for commercial entities).  

Common law requirements state that attorneys should not be minors, bankrupt individuals, or those suffering from mental disorders.  

Revoking a Power of Attorney:  

A general power of attorney can be revoked expressly, impliedly, by effluxion of time, or due to the death, mental incapacity, bankruptcy, winding up, or dissolution of the donor.  Irrevocable powers of attorney, created to secure proprietary interests or obligations owed to the attorney, cannot be revoked without the attorney's consent.  Revocation of LPAs and EPAs is more involved and depends on the donor's capacity at the time of revocation.  

Form of Grant of Power of Attorney:  

The instrument appointing the attorney must be executed as a deed.  It can be a separate document or included as a clause in a commercial agreement. Various precedent forms of power of attorney are available for different purposes. 

Execution by Power of Attorney:  

When signing a contract or deed, the attorney signs in their own name on behalf of the donor. 

 Specific execution clauses for attorneys are available for deeds and contracts.  

The donor cannot act as a witness to the attorney's signature.  


Having a power of attorney in commercial transactions is essential to ensure authorized representation and facilitate the contracting process.  

Understanding the characteristics, types, and considerations for granting and revoking powers of attorney is crucial for both individuals and commercial entities.   

By following the proper execution formalities, parties can navigate commercial transactions with confidence and legal compliance.

Legal Notice: Publisher: Atkins-Shield Ltd: Company No. 11638521
Registered Office: 71-75, Shelton Street, Covent Garden, London, WC2H 9JQ

Note: This publication does not necessarily deal with every important topic nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. The information contained in this document is intended to be for informational purposes and general interest only. 


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