The Power of Attorney (POA) is a useful, valid, and legal document. It is widely used all around the UAE. It is instrumental in enabling individuals to delegate their authority to others. It offers authority and power to another person to make a decision or act on behalf of someone else. It is a relationship between a principal who delegates authority to other individuals. It involves the agency or attorney who is delegated the power to act or decide.
Power of Attorney
Power of attorney POA offers great convenience to a principal to conduct its activities. It makes delegation easier and simpler. The legal, financial, personal, and other matters can be handled more easily. As the use of POA grows due to its usefulness, similarly, the challenges are overwhelming. It has been a serious cause of concern that the abuse of Power of Attorney POA is growing day by day. This has compelled the government of the UAE to take strict action to combat the arising issues.
Laws and Regulations
Nevertheless, stringent laws and regulations have been established to allow transparency. Besides, actions are taken to create awareness among the people of UAE about the misuse and correct use of POA. However, its misuse can also be very harmful and dangerous. It can adversely impact the finances. Furthermore, its misuse can lead to serious monetary losses. It may also result in severe legal disputes and disagreements. It negatively impacts the reputation and goodwill of the principal.
Types of POA: Globally
Generally, there are 4 types of POA including General Power of Attorney, Specific POA, Durable POA, and Limited and Duration Power of Attorney. Besides, it is essential to understand the significance and right use of Power of Attorney POA.
Abuse of POA
Abuse of POA is a common practice and thus it is essential to address the shortcomings. The abuse normally occurs when the agent exceeds its power or stated authority. He acts more like a principal rather than an agent.
Some of the most common examples include the following:
- Any unauthorized transaction is an abuse of power. Anyone selling or transferring the property without proper and valid principal consent is also part of the abuse of POA.
- Secondly, any unauthorized transaction also constitutes the misuse of POA. Any abuse of funds, money, or assets that are entrusted to an agent by the principal is abuse.
- The conflict of interest also forms part of misuse. Any agent who acts in ways that do not benefit the principal but instead harms them also constitutes the abuse of POA.
Fraudulent Activities
Moreover, fraudulent activities are quite common. If any agent uses the Power of Attorney POA to commit fraud like forging the documents, fake signatures, or misrepresenting the principal in any form is a misuse of the power.
Legal Implications
There are legal implications to the abuse of Power of Attorney in the UAE. The government can take abuse very seriously and has placed strict laws and regulations to deal with it. The specifically designed regulations address the misconduct efficiently. According to the law, the agents have a fiduciary duty. It means it is obligatory for the agent to act in good faith and also account for the best interest of the principal. Anyone who breaches the fiduciary duty will face severe consequences. It also results in the automatic revocation of the Power of Attorney POA.
UAE Penal Code
As per the UAE penal code and federal law, any agent who is involved in fraudulent activities will face criminal liability. Agent is involved in illegal activities or embezzlement which is a serious criminal offence. This may lead to a jail sentence, heavy charges, and in serious cases life imprisonment.
- Additionally, anyone who misrepresents or forges the use of POA is termed as a criminal offense. This will lead to serious punitive actions against the agent.
Contractual Violations
Any contractual violations are also a criminal offense. In case, if any agent violates, or breaches the terms of the POA, the principal has the right to file a case for a breach of a contract. Besides, the principal can seek compensation and claim for the damages. Besides, it must be notarized by the UAE notary public to get the right stamp. This will make the document valid and legitimate.
Outline scope of POA
Thirdly, it is important to clearly outline the scope of the POA. It must also describe the limitations of the agent’s power and authority to make things clear and understandable. Proper steps must be taken to avoid the misuse of POA. It is advisable to wisely choose the agent. Always select the agent carefully by doing homework. Always go for a trusted individual who has a proper track record of integrity, honesty, and professionalism.
Besides, it is important to account for the conflict of interest. If an agent has a conflict of interest, it is essential to avoid it altogether. A periodic review of the agent’s action is necessary. The time-to-time monitoring will ensure compliance. Giving a free hand to the agent is not fruitful. The principal must keep an eye on the agent and also request regular updates. Al Shaiba Advocates and Legal Consultants, is one of the best Dubai Law Firms. We have a team of dedicated and top Emirati Lawyers and Legal Consultants. We have a team of UAE’s leading lawyers and legal consultants.