As humans interact and carry on all sorts of commercial and non-commercial transactions, there is sometimes the need for individuals to act on behalf of others. This is generally or broadly referred to as Agent/Principal relationship. This has become particularly important in today’s world of unparalleled speed in transactions and human interactions. In this regard, the Law of Agency has evolved where under strict contractual obligations, the agent acts on behalf of the principal. One way this is clearly manifest in law is through a power of attorney.
A power of attorney is an instrument in which one person the principal (donor) appoints another person (donee) to act as an agent on his behalf, thus conferring authority on the agent to take care of a variety of transactions for the principal. This includes instituting an action in court, signing papers, cheques, title documents, contracts – see Section 14, Property and Conveyancing Law, 1959 Western Region (applicable to Nigeria’s old western region). It also includes handling a tax audit or maintaining a safe-deposit box on behalf of the principal.
Where any such power for disposing of or creating a legal estate is exercised by a person who is not the estate owner, the power shall, when practicable, be exercisable in the name and on behalf of the estate owner.
The power of attorney may be made orally or by letter of appointment (in writing). However no formality is required for a valid appointment of an agent except for instance, where the authority of the agent is to execute a deed on behalf of the principal. The court in Ironbar v. C.R.B.R.D.A. (2004) 2 NWLR [Pt. 857] 411, held that:
No formalities are required for the creation of agency. So unless otherwise provided by or pursuant to any statute or by the terms of the power or authority under which the agent is appointed, an agent may be appointed by deed, writing or by word of mouth.
This position was further reiterated in the recent case of UTC V Philips (2012) 6 NWLR (Pt. 1295) 144
As in most cases, the power of attorney is usually executed and the person receiving the power of attorney may be referred to as an “attorney in fact”.
The power to create a power of attorney is one which is governed by the general law of contract. An infant or minor can lawfully appoint an attorney (agent) as to the necessaries of life or for contracts beneficial to the minor. A person of unsound mind lacks the capacity to appoint an agent. As regards companies who are registered under Part A of the Companies and Allied Matters Act 2004, may appoint an attorney to act on its behalf.
There are two types of power of attorney, a general power of attorney which covers all activities and a special power of attorney which grants powers limited to specific matters, such as selling a particular piece of real estate, handling some bank accounts or executing a limited partnership agreement. The principal determines the amount of power given to the attorney-in-fact (agent) and this individual can be given the authority to deal with only a particular issue or to handle most of the principals’ personal and financial matters (a general power of attorney). Regardless of the type of power of attorney granted, the attorney-in-fact is responsible for keeping accurate records of all transactions that he or she makes on behalf of the principal. The attorney-in-fact also is responsible for distinguishing between the types of decisions he or she has the power to make and other decisions. A power of attorney may expire on a date stated in the document or upon written cancellation.
The court in Vulcan Gases Ltd. v. G.F. Ind. Gasverwertung A.G. (G.I.V) (2001) 9 NWLR [Pt. 719] 610. Held that the relationship of principal and agent may arise in any one of five ways, namely:
By express appointment whether orally or by letter of appointment or, indeed, by a power of attorney, under this heading. No formality, such as writing is required for the valid appointment of an agent except for instance, where the authority of the agent is to execute a deed on behalf of a principal. In which case, the agency itself must be created by deed.
By ratification of the agents acts by the principal. This mode of creation of agency is sometimes expressed in the maxim omnos ratihabitio retrotrahitur et mandato priori ae quiparatur.
By virtue of the doctrine of estoppels.
By implication of law in the case of agency of necessity and;
By presumption of law in the case of cohabitation.
In that case, it was argued by counsel that the power of attorney was not valid before the institution of the action by the donee. The court held that even if an action is commenced without the authority of the purported plaintiff and is therefore incompetent and improperly constituted, the plaintiff can ratify his solicitors act, so that it will no longer be open to the defendant to object that the action is not properly brought. This was a similar position held in the recent case of U.T.C (NIG) PLC. V. Philips . The court in Vulcan’s case further stated that an agent can institute an action on behalf of his principal. Also, that there is no statutory requirement in Nigeria for an agent to sue or defend under a power of attorney on behalf of his principal or to do so by deed.
It is important to note that the power of attorney is to be construed strictly. This was the decision of the court in Bryant, Powis and Bryant v. La Banquedy Peuple (1893) AC 170, 77. Thus, external evidence of what the power of attorney is or ought to have been is inadmissible. However, the court construes the power to include incidental powers which are necessary for its effective execution.
It is possible to appoint more than one person as attorney-in-fact. Under such joint power of attorney, decisions must be made by consensus. You can also be specific as to when your power of attorney provisions should take effect. The attorney-in-fact can be a spouse, adult, child, relative or trusted friend of the principal, as long as he or she acts in good faith on behalf of the principal at all times.
The actions of an attorney-in-fact are legally considered those of the principal, so the principal should always choose a trustworthy individual. In the document, the principal should always include restrictive language and include clauses requiring the attorney-in-fact to keep accurate and adequate records which are to be provided on regular basis to the principal.
A power of attorney generally is terminated when the principal dies or becomes incompetent but the principal can revoke the power of attorney at any time. A power of attorney may expire on a date stated in the document or upon written cancellation. Usually the principal acknowledges before a notary public that he/she executed the power, so that it is recorded if necessary.
If the document has not been registered, it can be terminated by:
The principal’s death
A termination procedure designated in the original power of attorney document
Destroying the document if the principal is still competent
Revoking the durable power of attorney by a written document that is signed, notarized, and sent to the attorney-in-fact by certified or registered mail if the principal is still competent.
If the document has been registered, it can be terminated by:
Revoking the durable power of attorney by filing a written revocation in the Registrar of Deeds office where the original document was filed
The death of the principal
The unavailability of an attorney-in-fact.
If the attorney-in-fact dies and the principal has not named an alternate, the power of attorney document is also terminated. Regardless of the way that the power of attorney is revoked, the attorney-in-fact should always be notified of the termination of the document.
Irrespective of the fact that the power of attorney may be revoked; which may affect some persons (third parties), statutes have provided two exceptions when the power of attorney would become irrevocable. The first exception is provided under section 8(1) of the Conveyancing Act (CA) 1882 and section 143(1) Property and Conveyancing Law (PCL) 1959 (applicable to western Nigeria). Where such power is given for valuable consideration, it cannot be revoked until the security is realised. Secondly, as contained under section 9(1) CA 1882 and 144(1) PCL, where the power is stated to be irrevocable for a particular period (not exceeding one year), the power shall not be revoked during the period either by anything done by the principal without the concurrence of the agent-in-fact or by the principals death, disability or bankruptcy. Section 7(1) of the CA 1882 and 142(1) PCL also protects third parties.
The purpose of granting a power of attorney is to ensure that when you are unavailable or unable to make decisions; your interest will continue to be protected by the person(s) whom you have chosen. Also, if you became ill and unable to manage your day to day finances, your bank and other organisations will not accept instruction from anyone who has not been legally authorised to act on your behalf.
Mandyen Brenda Anzaki and Taiye Tolu Shittu