The Power of Attorney in South Africa Requirements, Validity, Limitations

WHAT IS A POWER OF ATTORNEY:

The Power of Attorney is a legal document where one or more persons (known as the principal(s)) grants authority to another person (known as the agent) to act on his behalf and in his (principal’s) name.

A Power of Attorney is a useful tool in instances where the principal needs to delegate certain powers where he is unable to act, for instance if the principal is living abroad.

It is essential to understand what a Power of Attorney is and what the consequences are of granting a Power of Attorney to an agent.

A Power of Attorney enables the agent to act on behalf of the principal and in his name in different instances, such as property transactions, legal proceedings, business operations, and financial matters (to name a few) and grants the agent authority to, amongst others:

• execute financial transactions (make or receive payments, buy or sell assets, invest funds, etc.);
• sue on behalf of the principal;
• sign, execute, submit, request and receive documents;
• conclude agreements.

The powers can be specifically or broadly defined and is it important to understand the rights and responsibilities outlined in the Power of Attorney. It is important to note that the principal can only grant powers/authority which he can personally perform.

TYPES OF POWERS OF ATTORNEY:        

Generally, the types of Powers of Attorney take the form of either a General Power of Attorney or a Special Power of Attorney.

1. Special Power of Attorney:

A Special Power of Attorney grants specific and defined powers to the agent and is limited to the defined powers granted in the Power of Attorney, and can be limited to certain period, certain action, asset or transaction.

2. General Power of Attorney:

A General Power of Attorney grants the agent broader powers and relates to various matters, and is usually defined in a wider sense to cater for an array of possible situations.

The type of Power of Attorney will depend on the needs of principal and should be discussed with a professional before executing the Power of Attorney.

REQUIREMENTS FOR A VALID POWER OF ATTORNEY

Several requirements are applicable to execute a valid Power of Attorney:

1. AGE & MENTAL CAPACITY:

The principal must be at least 18 years old and have mental capacity to understand the nature of consequences of granting Power of Attorney at the time of executing the Power of Attorney. If the principal does not have the necessary mental capacity to understand the nature and consequences, the Power of Attorney will be invalid.

2. IN WRITING:

A Power of Attorney needs to be in writing to ensure legal enforceability and validity.

3. SIGNATURE – PRINCIPAL AND WITNESSES:

The principal needs to sign (and initial) the Power of Attorney and needs to be witnessed.

The principal may sign by the making of a mark, which must (as with signature) be witnessed.

The Power of Attorney also needs to be signed by the principal in the presence of two competent witnesses who will also sign the Power of Attorney in their capacity as witnesses.

4. CLEARLY DEFINED PARAMETERS:

The Power of Attorney should not contain any vague or unclear powers.

Certain Powers of Attorney, such as Power of Attorneys relating to property transactions need to comply with the relevant legal requirements.

REVOKING / LAPSING OF A POWER OF ATTORNEY:

Apart from Powers of Attorney which lapse after completion of the specified act, or lapsing upon a certain time, a Power of Attorney can at any time be revoked by the principal, either in writing or by overriding the existing Power of Attorney new Power of Attorney.

It is also important to understand that a Power of Attorney lapses when the principal or agent:

• Passes away; or
• Becomes mentally incapacitated

The South-African legal system does not provide for Powers of Attorney which remain valid if the principal is no longer mentally capable of understanding the nature and consequences of the Power of Attorney. In these instances, the person needs to be placed under administration or curatorship.

Although a Power of Attorney is a useful instrument to assist in various aspects, whether relating to personal or business matter, it needs to be carefully considered and drafted by professionals to ensure that the objective is accomplished.