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What is a Power of Attorney for Business?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 29 November 2016
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A power of attorney for business is a legal form authorizing someone to act on behalf of a business. The form typically details the settings and transactions where the person has power of attorney, rather than granting a general power of attorney that would allow the authorized agent to act completely freely. There are a number of settings where such documents can be useful and people interested in giving power of attorney to a person associated with a business can discuss the specifics with a lawyer.

Power of attorney forms provide legal authority for a person acting as an agent. A power of attorney for business can allow people to sell securities, access financial accounts, place orders, write checks, and perform other activities needed to keep a business running. It may limit certain activities such as hiring and firing powers or access to certain accounts for security reasons. When a person exercises this power, any decisions made are treated as though they came from the business itself.

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It is possible to use a generic power of attorney form to draft a power of attorney for business, by checking off various fields on the form to indicate what kinds of decisions a person can make. Attorneys can also be involved in the creation of a document tailored to specific needs, and this may be recommended. Getting advice from an attorney can help people draft a document with the appropriate scope of powers and ensure that the document clearly outlines all of the permissions and restrictions.

Power of attorney for business can be effective at all times, or only take effect under certain circumstances, like when the primary decision-maker is not available or is incapable of making decisions. While making decisions about power of attorney, people should think about the needs of the given situation and consider what kinds of powers they want to grant and when. It is also important to discuss it with the person being granted power of attorney, so that individual has an understanding of what is expected.

Generally, someone acting with power of attorney is expected to make decisions in the best interest of the business and its operators. These decisions might not necessarily be those that the person would make personally, but they support the stated goals of the business. The decisions must also be within the scope of the law; someone acting under power of attorney for a business cannot use these powers to coordinate illegal activities.

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Terrificli
Post 2

@Soulfox -- I think you are right, but a business power of attorney is a little bit different. In theory, one of those will terminate at a certain time or be revoked. Also, they can be made to only grant power of attorney for a specific purpose and then automatically be revoiked once that purpose has been completed in full.

Executives, on the other hand, are more like agents of the company that have a different relationship. The business power of attorney is generally for outsiders, whereas executives are part of the company.

Soulfox
Post 1

In a way, don't executives who act on behalf of a business have a power of attorney anyway? I mean, a corporation is considered a person under the law and executives are given broad powers to spend money, enter contracts and do other things on behalf of that corporation.

It would seem that certain executives effectively have a power of attorney as part of their jobs. Without people authorized to make certain decisions, the company won't last long at all.

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