Imagine this: you’re on vacation in another country, but you need to sign an important contract in Lithuania. Or perhaps your grandmother can’t go to the bank or handle paperwork herself due to health issues. A friend asks you to help sell his apartment because he lives abroad. According to lawyers, there is only one solution to such situations: a power of attorney. A power of attorney is a written document that grants the right to someone to perform legal actions on behalf of another person. Rokas Puodžiūnas, a lawyer at the AVOCAD law firm, notes that while it is a convenient and frequently used tool, it is important to know the basic rules associated with it to ensure it works smoothly and to avoid mistakes.
First of all, the will of a single person (the principal) is sufficient to create a power of attorney. “The representative’s consent is not required for the issuance and entry into force of the power of attorney. The chosen representative is not obligated to perform the duties entrusted to them; the law grants the representative the right to refuse the power of attorney issued to them,” the lawyer notes.
The principal who issues the power of attorney is called the attorney-in-fact and the agent who receives the power of attorney is called the agent. The power of attorney specifies the specific acts to be performed by the principal on behalf of the agent with respect to a third party.
The rights conferred on a representative can only be confirmed by a power of attorney issued by the representative, so the representative must produce the power of attorney to third parties when performing any act on behalf of the principal.
The lawyer also notes that powers of attorney must clearly specify the rights granted to the authorized representative. “The law does not permit the specification of abstract rights. For example, it is not permissible to state that the power of attorney grants the authority to perform all possible legal acts. The power of attorney must contain a finite and comprehensive list of the rights being granted,” states R. Puodžiūnas. Furthermore, a power of attorney cannot be granted for rights that can only be exercised personally (e.g., entering into marriage, drafting a will, establishing usufruct over property).
Powers of attorney vary from one-off to more powerful. For ease of understanding, they are classified according to the extent of the rights they confer:
- A single (ordinary) mandate is one that is intended for one specific act. For example, if you need to sign a contract for the sale of a car and you can't do it, you issue a power of attorney to someone else to do it for you.
- General Power of Attorney - when you want someone to help you take care of your property, protect it or manage its day-to-day affairs. This is a slightly broader power of attorney, but still limited.
- Special mandate - for action in a specific field. For example, if you want someone to represent you in court or handle your affairs at the bank.
Powers of attorney can also be issued to one person or several. If you appoint one specific person, this is called a separate power of attorney. If you authorise several people and they have to act together, this is a general (quantitative) authorisation.
Another important point, according to an AVOCAD lawyer, is the duration of the power of attorney. It can be fixed-term (when the expiration date is clearly specified) or open-ended. “However, if no term is specified, the law still limits its validity—such a power of attorney is automatically valid for only one year from the date of issuance,” says R. Puodžiūnas.
To be valid, a power of attorney must be in a separate written document and signed by the attorney-in-fact - the one who authorises another to act on his/her behalf. In some cases, the law also requires notarisation. This is necessary when authorising transactions requiring a notarial form, when acting on behalf of a natural person in dealing with legal persons or when dealing with actions relating to the management, use or disposal of immovable property.
Mandates are not perpetual. They expire in various ways - when they expire, when the attorney-in-fact decides to revoke it, or when the attorney-in-fact refuses to execute it. A power of attorney also ceases to have effect when one of the parties disappears - for example, if a legal person is wound up or is declared bankrupt, or if one of the natural parties dies, or is declared incapacitated in a particular field, or is simply declared missing.
The lawyer reminds you that when the power of attorney ends, both the principal and the attorney-in-fact have their duties. The principal must reimburse the necessary expenses incurred by the agent in the performance of his or her mandate - unless it was agreed in advance that this would be done without remuneration. If both parties are natural persons, the agreement is presumed to be gratuitous unless otherwise stated.
The principal also has a duty to inform of the end of the mandate, in particular if he or she revokes it, or if the mandate ends because of death or a change in legal status. In such a case, the heirs should be notified. In the meantime, the attorney-in-fact must return the original document - if he or she is unable to do so, his or her successors must do so. In addition, the attorney-in-fact must be accountable to the principal: he or she must give full details of how he or she carried out the assignment, the acts he or she performed, the documents he or she signed and the benefits he or she received on behalf of the principal. Anything received during the execution of the assignment must be returned to the principal.