The power of attorney; A handy document for conducting business

A power of attorney (POA) or letter of attorney or mandat/procuration as Francophone’s call it, is an authorization to act on someone else’s behalf in a legal or business matter. The person authorizing the other to act is the principal, grantor or donor (of the power), and the one authorized to act is the attorney. Under Rwandan law, a power of attorney may be oral or in writing. It is however prudent to have it in writing and witnessed by a notary public so that its validity is not in doubt. It is only valid if the attorney accepts the power of attorney. Some of the examples of what powers may be granted under a power of attorney include; signing contracts on behalf of the principal who may be in another country but urgently needs to sign certain contracts in Rwanda, in corporate law where promoters/shareholders of a company authorise a person to incorporate the company on their behalf, in the capital markets where a principal requests a securities broker to trade on the principal’s behalf, or in real estate where a landlord empowers a real estate agent to collect rent on his behalf or look for a buyer of the property. An attorney is required to be completely honest with and loyal to the principal in their dealings with each other. If the attorney is being paid to act for the principal, the contract is usually separate from the power of attorney itself, so if that contract is in writing, it is a separate document, kept private between them, whereas the power of attorney is intended to be shown to various other people as proof that the attorney is authorised to act on behalf of the principal. A power of attorney may be limited to one specified act or type of act, or it may be general as determined by the principal and the attorney. Under Rwanda law, an attorney is required to do the act(s) which the power authorises him to do and nothing else. The attorney will be liable for damages and interest in case of failure to execute the said act(s). Under the law, a power of attorney becomes ineffective if its grantor dies or becomes “incapacitated,” meaning unable to grant such a power, because of physical injury, mental illness or bankruptcy. Similarly if the attorney dies or becomes incapacitated the power of attorney becomes ineffective. Also, if it is revoked by either the grantor or attorney, it ceases to be valid. 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 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 may still be bound by the acts of the agent, though the agent may also be liable for such unauthorized acts. A power of attorney is a very convenient document for doing business and its use should be encouraged. kalricardo@yahoo.com Richard Balenzi is a lawyer