Posted by syednaqib on Nov 18, 2008 in
Law 101 
And so i was asked about the use of a Power of Attorney. In a nutshell, a person can appoint an agent to act on his behalf acts which he is capable of performing himself such as entering into contracts or negotiating on the principal’s behalf and so on. A Power of Attorney (PA) is a document that formalizes this relation between the agent and the principal and stipulates the powers that are given to the agent.
It can be an unlimited PA giving the agent power to do all acts capable of being done by the principal, or a limited PA for a specific purpose. It can be a revocable PA or an irrevocable one, depending on the terms within the PA.
The existence of a PA would basically make any arrangement between the agent and third parties clearer as the third party could always refer to the PA to look at the extent of the powers conferred upon the agent. It would likely reduce the possibility of a dispute, and lessen the need to verify with a principal on whatever the agent claims it is capable of doing on the principal’s behalf. The procedures and instruments in creating a PA is governed by the Power of Attorney Act 1948. A valid PA, says the Act, would have to be duly executed and authenticated, and a copy deposited in the Senior Assistant Registrar’s office at the High Court.
And yet, there are also circumstances where the PA is misused.
It is not unheard of that desperate PA holders would approach third parties to propose a transaction when in fact the principal had died and the PA document had become void, in the case of a revocable PA. There are also circumstances when the PA sells a land on the principal’s behalf and take the bulk of the proceeds, giving only a small portion of it to the principal, as the contract was signed between the agent and a third party. Despite the obvious good that it brings, one can never be to careful in dealing with someone claiming to be a PA holder.
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Posted by syednaqib on Nov 7, 2008 in
Law 101 
The law provides that a contract made under Coercion, Undue Influence, Fraud, Misrepresentation or Mistake can have one of two effects; either it is invalid from the very beginning, or may be invalidated by the contracting party. What effect the events mentioned have over a contract will be explained in the following paragraphs.
Section 19(1) of the Contracts Act 1950 states that contracts made under coercion, fraud or misrepresentation (agreements made without free consent) is voidable at the option of the party wronged. An exception to this is when such consent was caused by misrepresentation or fraud by silence, where the party whose consent was so caused had the means of discovering the truth with ordinary diligence, the contract is not voidable.
However, it should be borne in mind that a fraud or misrepresentation which did not cause the consent to a contract of the party being defrauded or to whom the misrepresentation was made, does not render a contract voidable.
As the examples given by the Act itself clearly states, if a person sells a factory to another person representing that it can produce 500 products a day when in fact it can only produce 400, the contract is voidable. But if the person buying the factory had checked the factory documents and had known that the factory could only produce 400, and still bought the factory, the contract is not voidable.
Next, regarding a contract made under undue influence. Such a contract is voidable at the option of the wronged party. It may be set aside absolutely, or if the wronged party has received any benefit, upon terms and conditions as deemed fit by the court.
An example stated in section 20 of the Contracts Act is when A, a moneylender, advances $100 to B, an agriculturist, and, by undue influence, induces B to execute a bond for $200 with interest at 6 per cent per month. The court may set the bond aside, ordering B to repay the $100 with such interest as may seem just.
Finally, the Act also states that a contract entered into when both parties are under a mistake of fact is void.
The fact must be a fact essential to the agreement and not merely an opinion such as an erroneous opinion as to the value of the subject matter of the agreement.
As an example, A agrees to sell his car to B, but unknown to both, A’s car was stolen before the time of the agreement and its parts dismantled and sent to various locations. The agreement is void.
