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Ordinary powers of attorney toolkit
Practical Law UK Toolkit w-018-5092 (Approx. 12 pages)
Ordinary powers of attorney toolkit
| Maintained • England, Wales |
A guide to Practical Law's resources relating to ordinary powers of attorney, including links to the relevant resources.
About this toolkit
Powers of attorney are a versatile and common means of delegating authority for a wide variety of purposes. While several different types of power or attorney can be granted under English law, the form that is used most regularly in a transactional or commercial context is the ordinary power of attorney (also known as a general power of attorney).
This toolkit provides a guide to Practical Law's materials relating to ordinary powers of attorney, including links to the relevant resources.
Overview of powers of attorney
A power of attorney is particular type of agency appointment by which one party (donor or principal) gives another person (attorney or donee) the power to act on their behalf and in their name.
There are three main types of power of attorney under the laws of England and Wales: ordinary powers of attorney; enduring powers of attorney (if created before 1 October 2007) and lasting powers of attorney.
The ordinary power of attorney is used most regularly in a transactional or commercial context. The main legislation governing ordinary powers of attorney is the Powers of Attorney Act 1971 (POAA 1971).
Unless it satisfies certain statutory or common law criteria rendering it irrevocable, the attorney's authority under an ordinary power of attorney generally comes to an end if either the donor or attorney dies or loses mental capacity (see Terminating an ordinary power of attorney).
As a power of attorney is a form of agency, many of the key legal principles governing the relationship between the attorney, donor and third parties that deal with the attorney derive from the common law of agency. For general guidance in this area, see Practice note, Common law of agency.
What can ordinary powers of attorney be used for?
Ordinary powers of attorney can either confer general authority on the attorney to deal with all the donor's property and financial affairs or, perhaps more commonly, authorise the attorney to take particular steps in relation to a specified transaction or matter.
There are certain statutory and common law restrictions on the acts that can be carried out by an attorney under an ordinary power of attorney. For instance, the donor may not delegate:
- The power to carry out appointments or functions of a personal nature.
- Their responsibilities as a director of a company.
In addition, authority in relation to the donor's health and personal welfare cannot be conferred by an ordinary power of attorney: a lasting power of attorney must instead be used for this purpose.
Additional rules apply to the delegation of a donor's power as a trustee or personal representative (see Powers of attorney granted by trustees and personal representatives).
Creating an ordinary power of attorney
In principle, any individual or legal entity with the requisite legal capacity to contract is capable of granting an ordinary power of attorney.
When conferring wide, general powers on the attorney, the donor can opt to use the statutory form of general power set out in Schedule 1 of the POAA 1971. If the donor wishes to give the attorney more limited powers, the document conferring the power must clearly set out:
- The desired scope of the attorney's powers and authority.
- Any express restrictions on their power.
It is common practice for a power of attorney to be set out in a separate instrument. However, if the power of attorney is incidental to another transaction or arrangement, it may also be dealt with as part of another agreement. Whichever approach is taken, the instrument creating an ordinary power of attorney must always be executed as a deed by the donor of the power (section 1(1), POAA 1971).
Acting under an ordinary power of attorney
An attorney has a duty to act in accordance with the terms of, and not to exceed, their authority. As a general rule, the donor will only be bound by transactions between their attorney and a third party if the transaction is within the scope of the authority conferred by the power of attorney (although third parties may be able to rely on statutory protection under section 5 of the POAA 1971 to uphold the transaction in certain circumstances, or a donor may confirm an unauthorised act retrospectively by ratification).
Terminating an ordinary power of attorney
While certain powers of attorney are irrevocable without the attorney's consent, the actual authority conferred by an ordinary power of attorney may generally be brought to an end by:
- Effluxion of time or fulfilment (or frustration of purpose).
- The donor revoking the power.
- Operation of law (including the donor's death, dissolution, winding up or loss of mental capacity).
- The attorney disclaiming the power.
Powers of attorney granted by trustees and personal representatives
Trustee donors
Except where the terms of the trust instrument provide to the contrary, a single trustee may delegate by way of an ordinary power of attorney made under section 25 of the Trustee Act 1925 the execution or exercise of all or any of the powers and discretions vested in them as trustee (either alone or jointly with any other person or persons), for a maximum of 12 months. A power given under section 25 is known as a trustee power of attorney.
In the case of a trustee of a trust of land:
- Section 1 of the Trustee Delegation Act 1999 permits a co-owner with a legal and beneficial interest in the land to delegate their functions as trustee of the land under an ordinary power of attorney or a lasting power of attorney.
- Section 9 of the Trusts of Land and Appointment of Trustees Act 1996 permits the delegation of trustee functions relating to the land to a beneficiary, provided that the beneficiary is not a minor and is entitled to an interest in possession in the land.
Personal representative donors
An executor or person entitled to be appointed as an administrator of a deceased's estate may, if they have the mental capacity to do so, appoint an attorney to apply for letters of administration to administer the estate on the donor's behalf (rule 31, Non-Contentious Probate Rules 1987 (SI 1987/2024)).
Once a personal representative has obtained a grant in their own name, their power to delegate their functions in the administration of the estate is subject to the rules in section 25 of the Trustee Act 1925 governing the delegation of powers by a trustee (see Trustee donors).