When running a business or acting privately, there are times when we are unable to carry out an action on our own, if only because we cannot be in two places at the same time. In such cases, the institution of a proxy comes to our assistance. A proxy is a person authorised to act on behalf of the person granting the power of attorney, often referred to as the principal. When we need another person to act for us, we should first consider the scope of the power of attorney. The Civil Code provides a basis for distinguishing three types of powers of attorney based on the criterion of the scope of the ability to act. The most „capacious” is the general power of attorney, which includes the authorisation to perform legal acts that are neither individually defined nor specified as to their type, but which fall into the category of ordinary management activities. The concept of ordinary management activities does not have a statutory definition. The decision as to whether an action falls into this category should be made taking into account the principal’s manner of functioning, as for one principal a given action will be of such nature, while for another it may not. If our intention is to entrust a proxy with a specific type of activity, a generic power of attorney should be drawn up. Such a power of attorney should specify the type (group) of legal acts that the proxy is authorised to perform and the subject of those acts. If, on the other hand, we wish to authorise a proxy to act in a specific action on our behalf, a special power of attorney will apply. In a special power of attorney, we should mention a specific action with specific parties and subject matter. It should therefore be borne in mind that it is not legally possible to globally empower an attorney to perform all legal acts.
A special type of power of attorney for entrepreneurs is the proxy, but this is a topic for a separate post.
Another aspect to consider when granting a power of attorney is its form. Two basic principles should be borne in mind. A declaration of intent to grant a power of attorney to perform a legal action for which specific form is required under pain of nullity of that action should be made in the same specific form or in a stricter form. I will use an example to explain. An agreement for the sale of shares in a limited liability company requires for its validity the written form with notarised signatures. If such an agreement is to be signed by a proxy, the power of attorney must also be granted in writing with a notarised signature. The form will also be observed if the power of attorney is drawn up in the form of a notarial deed. This is an extremely important rule, as failure to do so renders the act of granting a power of attorney invalid. The second basic rule is that a general power of attorney must be granted in writing. Failure to comply with this condition also results in the invalidity of the power of attorney.
A power of attorney may be granted for an indefinite period of time or for a specific period indicated in the power of attorney. It should be borne in mind that a power of attorney may be revoked at any time, unless the principal has waived the revocation of the power of attorney for reasons justified by the content of the legal relationship on which the power of attorney is based. A power of attorney may be revoked in any form, regardless of the form in which it was granted.
It is also worth indicating in the wording of the power of attorney whether the proxy is authorised to grant further powers of attorney – substitute powers of attorney. The proxy may only appoint other proxies for the principal if such authority is apparent from the wording of the power of attorney itself, from the law or from the legal relationship on which the power of attorney is based.
Granting a power of attorney may appear to be a relatively simple act, but in practice we very often encounter various problems related thereto. Therefore, we encourage you to consult them in case of any doubts in order to avoid problems with an action performed both by a proxy representing our interests and when it is us who performs an action with the other party acting through a proxy.
* Please note that this article addresses only certain aspects of the power of attorney in civil law. Other branches of law have their own regulations regarding powers of attorney, e.g. the need for forms in tax law.
Monika Pawłowska-Bielas | 12.15.2023
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