There are times where you could not transact business personally because of circumstances beyond your control for example, sickness, exorbitant travel expenses and emergency situations. To consummate your business transaction despite your absence you could execute a Special Power of Attorney – it is an instrument authorizing somebody as your agent to carry out a particular business transaction on your behalf.
Special Power of Attorney is a good way to transact business when you are not available to do it yourself. However, it is also risky if you are not careful in choosing your agent.
Your agent armed with Special Power of Attorney could perform all transaction you specifically mentioned in the instrument as if you were the one who entered into the undertaking. Any act of your agent consistent with the Special Power of Attorney is binding to you. Thus, it is important that the person you would choose as your agent is trustworthy, prudent, and reliable.
An example of a wrong choice of agent was a couple who listed their house for sale. They wanted to sell their house quickly for they need the funds for their purchase of a brand new house. When the couple had to go out of the country to attend a family emergency, they chose their close friend as their agent to sell the house in their absence. They executed a Special Power of Attorney. In the instrument, they did not specify the price range the house be sold.
Realizing that the couple wanted the house be sold quickly, their friend – agent, accepted an offer at a price below market value. When the couple came back their house was already sold. They are now looking for ways and means to recover their house and hired a lawyer to nullify the transaction made by the friend who was equipped with the Special Power of Attorney duly executed by them. As a result of wrong choice of an agent, the couple unnecessarily spent money for a lawyer not to mention the damaged friendship.
Again Special Power of Attorney is good way to transact business when you are not available to do it yourself. Nevertheless, you should be extra careful in choosing your agent whom you can truly trust because of the risk associated with it. Honesty is not enough, he/she must be experienced or knowledgeable on the task you want him/her to do on your behalf, otherwise, you will lose a fortune and a friend as in the above couple.
Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.