The deterioration of relations between the principal and the agent, as well as the loss of trust, often leads to the revocation of a power of attorney. When granting a power of attorney, individuals sometimes underestimate the possibility of future conflicts with the agent. To avoid problems, it is important that the text of the power of attorney be carefully drafted, that an expiry date for its validity be specified, and that other similar measures be taken.
The principal may revoke the power of attorney granted at any time. In order for the revocation to have legal effect vis-à-vis the agent, the agent must be notified of it.
The revocation of the power of attorney must be carried out in the same form in which it was originally granted. The agent may be notified in person and return the original of the power of attorney. In the event of deteriorated relations, a notarial notice is customarily sent, notifying the agent of the revocation. It is also advisable for the principal to send notifications to all persons before whom the agent may represent him, in order to prevent any possible actions on his part.
General and express powers of attorney
A special case is that of general or express powers of attorney, which allow the agent to dispose of real estate, to create rights in rem over it, or to encumber it. The law requires notarisation of the signature and of the content of such powers of attorney, carried out simultaneously. Powers of attorney for use before banks must also be notarised and entered in the "Edinstvo" (Unity) electronic register, maintained by the Notary Chamber. In order to protect themselves against bad-faith actions by the agent, principals must revoke such powers of attorney before a notary, who enters an extract in the electronic register. The revocation may be entered in the register only if the power of attorney has been notarised.
Legal consequences of revocation
Even after being notified of the revocation of the power of attorney, the agent may conclude a contract with a third party who was not aware of the revocation. In that case, the transaction will not have binding effect for the principal and will be invalid as against him. If, however, the transaction is in the principal's interest, he may ratify it. Should the principal refuse to ratify the transaction, the person purporting to act as agent owes compensation to the third party.
If the principal is a trader, the actions of the agent after the revocation of the power of attorney will be valid, unless the principal objects immediately upon becoming aware of those actions. The objection must be express and must be notified to the third party.
Registration and verification of the power of attorney
Where the termination of the authority is subject to registration and has been registered, third parties cannot claim that they were unaware of the revocation. Registration is carried out in the electronic register maintained by the Notary Chamber. Any party to a transaction may request the notary to verify the agent's representative power in this register.
If the agent and the person with whom he contracts collude to the detriment of the principal, the contract will have no legal effect as against him.
Should you require further information or assistance in drafting and revoking a power of attorney, please contact us on tel.: 02 851 72 59, or by e-mail: [email protected]
