What is a power of Attorney: Concept and Laws

What is a power of Attorney: Concept and Laws

This article on ‘What is a power of Attorney: Concept and Laws‘ was written by Ankita Kumari, an intern at Legal Upanishad.


A legal document known as a power of attorney enables one individual to act on behalf of another. Using a power of attorney (POA), which is a binding legal document, a person can designate someone to handle their property, health, or financial matters.

A power of attorney may be awarded for various reasons, like being abroad, illness, disability, etc. and it is created to grant the right or authority to someone else who can act on behalf of that person.

This article will make you understand what a Power of Attorney entails, its various forms, and the associated risks with it.


A power of attorney is a legal document that enables a person to name a representative to handle his financial, legal, or medical affairs if he is incapacitated.

It is an agreement between two people i.e. principal and the Agent. Under this arrangement, the person who designates his power to another person to act on his behalf is known as a principle, grantor, or donor and the person who accepts the authority is called an authority in fact or agent.

The scope of the authorized agent’s power to make decisions on the property, health care, and finances might vary depending on the terms and conditions. The agent’s legal ability to make choices regarding the principal’s possessions, income, or medical care may be extensive or restricted.

Various types of power of attorney:

  1. General power of attorney:

According to state legislation, the agent is empowered under this POA to take any actions on behalf of the principal. Such an agreement might provide the agent with the power to manage the principal’s finances, sign checks, sell real estate, manage assets, and file taxes.

  1. Special power of attorney:

In this, the principal grants the attorney specific authority to act on their behalf exclusively for the purposes stated, and the authority expires after those purposes have been achieved. Depending on the details, the transaction may be single or many.

  1. A durable power of attorney:

A power of attorney that is considered to be “durable” is one that normally lasts until the principal’s demise or until the document is revoked. A durable power of attorney, the durability of which must be expressly specified, continues to be effective even if the principal becomes incapacitated and is unable to make personal decisions.

How power of attorney works?

A power of attorney is a formal document that binds both the principal and the agent, also known as the attorney-in-fact. It is used when a principal is temporarily or permanently ill, disabled, or unable to sign legal documents. The principal must appoint a trusted POA to manage their business on their behalf. Documents can be acquired online or via a lawyer. Both parties must be signed the contract. In most cases, it needs to be seen by a third party.

The principal’s place of residence affects the procedures and laws. While the durable POA is widely recognized, many powers—such as the ability to make or amend a will, enter into a marriage, or vote—cannot be transferred by the principle.

The Powers of Attorney Act, of 1882, governs powers of attorney in India. A broad POA would theoretically give the agent every authority that the principal has. The agent may be given the following powers:

  • Execute all deeds, contracts, notes, mortgages, money orders, and drafts.
  • Manage, resolve, compromise, and modify all real estate-related issues.
  • Lease, collect rentals, grant, sell, bargain and mortgage.
  • Sell all stocks of shares, bonds, and other securities
  • All tax returns, insurance forms, and other paperwork should be filed and signed.
  • Decide on the donor’s or his minor children’s medical treatment.
  • Enter into agreements and perform all the contracts, agreements, writing, sign, execute and deliver, and acknowledge any agreement.
  • On behalf of the principal, sue in court.

Registration of Power of Attorney:

Under the Indian Registration Act, registration of power of attorney is optional. However, it is strongly advised that it be notarized in the presence of two witnesses. The Power of Attorney must, however, be registered with the office of the Sub-Registrar, which has jurisdiction over the principal’s residence, if the reason for its creation includes an immovable property.

The risk associated with the power of Attorney:

Despite all benefits, power of Attorney is associated with various risk factors. Giving the power of Attorney to someone means delegating all the authority which a person has, i.e. granting the agent full authority to sign, accept or reject on your behalf. Any transactions the agent handles run the risk of fraud if it turns out they are corrupt.

Some of the disadvantages are:

  • The agent’s competency at the time the power of attorney was written could come into an issue in the future.
  • Obtaining bank financing can be time-consuming since certain banks need that the document to be written on special forms. After six months to a year, many financial institutions refuse to accept the power of attorney.
  • The agent might abuse the powers if they are given too many generalized options.
  • The agent can out be unreliable.
What is a power of Attorney: Concept and Laws
What is a power of Attorney: Concept and Laws

Revoke of Power of Attorney:

 The principal is free to revoke the Power of Attorney whenever he chooses. According to Section 201 of the Indian Contract Act of 1872, some of the requirements for revocation are as follows:

  • If the principal revokes the agent’s power of attorney.
  • If the principal, agent, or both, pass away or are found insolvent by the court.
  • If the person holding the power of attorney relinquishes it.
  • When the transaction for which the Power of Attorney was given is finished.


  1. The principal must appoint a trusted power of attorney to take care of his finances, and medical or legal affairs to avoid any risk associated with such agreements.
  2. Before agreeing on the POA, both; parties must know about their obligations to perform it properly.


The concept of the power of Attorney facilitates the principle to fulfil his obligations even if he is not physically present and allows the agent to make decisions on behalf of the donor. The agent receives authority to act on behalf of the principal on a matter related to medical, legal, or finances.

The right of the principal to revoke such powers, which protects him from any harm caused by the agent, is crucial. Revocation is achievable in the majority of situations, although there are a few exceptions. The principal/agent should be informed of these terms before granting or receiving a power of attorney.

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