Mandate,Power of attorney and Letter of authority: All you need to know
What is the Power of attorney?
Power of attorney (authorization) is a document in which individuals, representatives at law of legal entities authorize other persons to represent or act on his (her) behalf in establishment and/or performance of civil transactions.
What is the Mandate?
A mandate contract is an agreement between the parties whereby the mandatary shall have the obligation to perform a task on behalf of the mandator, and the mandator shall only have to pay remuneration, if so agreed upon or provided for by law.
Note: The mandate and power attorney are the rights cast upon a third person to act on behalf of the principal person/s. The rights of mandate and power of attorney holders are very similar in the operation of bank accounts but they are issued for different reasons and purposes. A mandate is a simple letter of authority, signed by a constituent authorizing the bank to permit a certain named person to operate the account on his/her behalf.
Letter of authority?
A letter of authority is to either divulge sensitive material or to delegate a specific task. Whereas a power of attorney gives someone else complete power to act and make decision on their behalf; here the power could be regarding a specific task, such as purchase of a property, a business deal, etc., or the power could be absolute, i.e. complete power to make all decisions on their behalf.
Comparison between Power of Attorney and Letter of Authority:
| Power of Attorney | Letter of Authority | |
| Type | Legal document | Legal document |
| Function | Delegates power to another person or entity to act and make decisions on their behalf | Delegate sensitive legal, health or financial obligation to another person or entity |
| Purpose | To act as you and make decisions on your behalf. | To be present on your behalf and carry out a task. |
| Authority | Complete Authority – Can do everything on their behalf | Partial Authority – Can only do something on their behalf |
| Contents | Must specify full particulars of the concerned parties and provide precise, in-depth details for clarity and communication purposes. | Must specify full particulars of the concerned parties and provide precise, in-depth details for clarity and communication purposes. |
| Power | More Powerful | Less Powerful |
| Task used for | Should be used for more complicated or specialized tasks | Should be used for less complicated tasks |
| Details | More detailed | Less detailed |
| Directions | Sets out the directions in which the tasks should be complete | May or may not specify the directions in which the tasks should be completed |
| Notarized | Notarized Certificate | Simple letter. No notary requires. |
| Uses | Business Deal, Property Purchase, Make medical decisions on your behalf, etc. | Pick up government documents on your behalf, gain access to your private information or files, collect information on your behalf, pay bills or collect revenue on your behalf, etc. |
