A Power of Attorney (POA) is an essential document allowing a person (called, a principal) to grant authority to another person (called, an agent) to act on behalf of him. There are several differences between General and Special Power of Attorney, based on their Authority Scope, Duration of Applicability, Revocability, etc.; which are two forms of POA! Dive deeper into SPA vs GPA by going through the post!
Understanding General Power of Attorney (GPA)
Understanding Special Power of Attorney (SPA)
Differences between General and Special Power of Attorney
- Scope of Authority: In GPA, a broad authority grants extensive powers to the agent. On the other hand, limited or restricted authority is granted for carrying out any particular tasks or transactions under SPA.
- Objective: The purpose of GPA is to grant authority to a trusted party to act on behalf of the principal in diverse matters such as property, finances, legal representation, and decision-making. While, SPA grants authority for specific purposes or transactions i.e. property sales, lease agreements, or litigation.
- Flexibility: GPA offers flexibility and authorizes the agent to act in multiple matters and transactions on behalf of the principal. Whereas, SPA is not so flexible as it confers authority for designated tasks & transactions.
- Duration: Power or authority granted under GPA remains effective until its revocation or termination by the principal or in cases like the principal’s incapacitation or death. In SPA, the duration authority to the agent is either fixed or remains effective until the completion of the designated tasks/transactions.
- Representation Authority: GPA allows broader representation authority to the agent on behalf of the principal, mainly in third-party dealings, institutions, etc. However, SPA grants limited representation authority to the agent solely for specific tasks.
- Legal Formalities: GPA should be executed in accordance with the legal formalities and documentation specified under relevant laws consisting of notarization and attestation. SPA has similar legal formalities to GPA that ensure the legitimacy and enforceability of the document.
- Revocability: The principal can revoke or terminate GPA at any time by following compliance and legal formalities. The authority granted under SPA can be revoked by the principal at any time or upon completion of the specified tasks.
Why is Power of Attorney required?
Advantages of General Power of Attorney
- Extensive authority: This Attorney form grants extensive authority to the agent enabling him to act on several matters with no specific boundation.
- Prolonged/Perpetual Nature: GPA has a prolonged nature as it will remain effective until the principal repeals it. Consequently, it provides ongoing assistance for an indefinite period without requiring multiple renewals.
- Flexibility: It allows the principal to authorize the agent to handle their matters extensively on his behalf which may include financial transactions, property management, business operations, and also legal representations.
- Efficiency: GPA enables the principal to streamline required decision-making, maintain continuity in his matters, and expedite transactions, especially in cases where he is not available or incapacitated.
- Convenience: It makes the life of the principal convenient by allowing him to grant his discretion of decision-making in different aspects to any trusted agent so that he can handle his matters efficiently in his absence.
Disadvantages of General Power of Attorney (GPA)
- Risk of Abuse: Due to its broad-authority granting nature, GPA possesses the risk of misuse or abuse by the agent. Such misuses may include acting beyond their predefined scope of authority or engaging in unauthorized transactions.
- Absence of Specificity: GPA doesn’t restrict the agent’s powers to any specific transaction or condition may create confusion regarding the extent of authority granted. Subsequently, it may cause potential disputes to arise over interpretation.
- Complexity in Formalities: GPA execution is a complicated task as it requires the drafting of documents in compliance with prevailing laws, attestation, notarization, and registration. As a result, it can turn out to be a tedious and time-consuming task.
- Difficulty in Revocation: Revoking GPA may involve complexities, especially in case the principal is not mentally stable or incapacitated to convey his intentions clearly. Revocation of GPA in such conditions may lead to potential disputes or legal proceedings related to the termination of the agent’s authority.
Advantages of Special Power of Attorney (SPA)
- Specific Authority: SPA grants specific authority to the agent which is limited to a certain transaction or task. Simply put, the powers of the agent are restricted to the particular tasks or transactions depicted by the principal.
- Precise Clarification: Unlike GPA, Special Power of Attorney clearly states the agent’s powers thereby reducing ambiguity and ensuring that the authority granted to the agent aligns with the principal’s intentions.
- Customized Representation: SPA facilitates the principal to curb or customize the agent’s powers to meet their specific requirements, thereby allowing targeted representation and assistance for specific tasks or transactions.
- Flexibility: Since SPA grants limited authority, it gives freedom to the principal so that he can appoint other agents for different tasks.
- Focused Scope: By granting authority for particular tasks or transactions, SPA minimizes the risk of authority abuse or its misuse by the agent. As a result, it offers higher accountability and better control.
Disadvantages of Special Power of Attorney
- Restricted Applicability: It may have limited applicability beyond the tasks or transactions mentioned in the document and therefore requires execution of several SPAs for distinct tasks which can be arduous.
- Rigidity or Non-Flexibility: Due to specific or limited authority granted through SPA, it may lack flexibility. This nature of SPA makes it unsuitable or minimally suitable for situations where the principal needs enduring assistance or representation.
- Limited Tenure: This power of attorney is effective only for the timespan specified in the document or till the completion of the designated tasks/transactions. So, it doesn’t fit the long-term or ongoing representation.
- Oversight Scope: In case, the principal may not properly anticipate the situations or tasks requiring representation, it may lead to authority gaps and difficulties in handling the designated affairs properly.
Document Required for GPA & SPA
- POA Form: A POA form that outlines the scope of authority to the agent as well as any specific terms or conditions imposed by the principal, should be duly filled and signed before final submission.
- Identity Proofs: The valid identification documents of the principal and the agent such as a passport, driver’s license, or Aadhaar Card are required to verify the identities of the parties involved.
- Witnesses Testimonials: The Signatures of the witnesses who are attesting to the execution of the POA document, along with their valid identity proofs are required.
- Notarization or Attestation: As per the jurisdiction’s regulations, it may be required to notarize or attest the POA document by authorized officials to authenticate it.
- Registration: Either form of POA may need to be registered with the relevant authorities to ensure its legal enforceability.
Process & Legalities Involved
- Legal Capacity: The principal must be legally capable of authorizing POA. Simply put, the principal must be mentally healthy enough to make decisions and also understand the short & long-term consequences of his decisions or actions. His action or decision should be free from duress or external influence.
- Documentation: Both two forms of POAs must be documented in writing, clearly delineating the scope of authority granted to the agent, the duration of the POA, and any specific terms or conditions imposed by the principal.
- Execution: The execution of the document must be done in compliance with the prevailing law of the jurisdiction. The document execution may include document signing in the presence of witnesses, notarization, attestation, or registration with the dedicated authorities.
- Revocation: The principal reserves his right to revoke either form of POA at any time by issuing a formal notice of revocation to the agent and associated third parties. Revocation should take place in compliance with the legal procedures specified under the applicable laws.
Navigating the realm of Power of Attorney (POA) requires a clear understanding of its types, namely General Power of Attorney (GPA) and Special Power of Attorney (SPA), along with their nuances. Getting aware of the differences between GPA & SPA can help you opt for the right one as per your requirement, thereby aiming to strike a balance between authority and control.