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‘Power of attorney’ in banking services (1)

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Power of Attorney’ is the authority given by the principal (donor) under seal or deed authorising the agent to act on his behalf for all his lawful transactions.

It is a written instrument, which authorises one person to act as another’s agent or attorney, thereby making the agent to assume the rights of the principal.

The power of attorney may be for a definite or specific act; it may be general in nature.

The terms of the written power of attorney may specify when it will expire, that is covering a specific period of time. If not, the power of attorney usually expires when the person granting it dies, that is life-long tenor.

Relating to banking matters, some institutions require that you use the bank’s power of attorney forms and filling the required information.

Any personal(s) having power to contract may be appointed as an attorney, that is the beneficiary or holder of the power of attorney.  An attorney being an agent cannot delegate or subjugate his powers under the contract except as authorised by the principal and contained in the document.

A power of attorney may be essential where the principal, that is the donor, is ill or wants to embark on a journey outside the country, or area of jurisdiction of the document.

Bankers would need to exercise reasonable care and ensure that the attorney operates within the power given.

Powers of attorney are sometimes said to be irrevocable or may be stated to be revocable for a specified period, say six months or one year; and that is different from the expiry power.

The revocable power may not carry a date but subject to the will of the principal while the expiry power will carry specific date.  Once it is revoked, the power of the donee (agent) ceases and cheques drawn by the donee, including those drawn before but presented after the revocation, must be returned unpaid, unless confirmed by the customer (the principal).

Note here that the donee (agent) is not necessarily a customer of the bank directly but by the virtue of the power of attorney from the principal (who is a customer of the bank) the donee has automatically become a customer.

The maximum length of time within which the power can be in force or binding is one year. The power of attorney is automatically revoked by operation of law when the donor dies, becomes insane or bankrupt, in case the donor is an individual or a firm; if company, upon its winding up.


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