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Any adult with full legal and contractual capacity is entitled to make decisions about their personal welfare, financial affairs as well as medical treatments. It may however be that sometimes this full capacity individual is not able to act personally (for example to sign a document for a sale of a business) because that person may, for instance be out of the country or not near the place where the act needs to be performed. This is where a third party and thus the law of agency comes in.
This being said is it common practise in South African Law that no person may act on behalf of another unless that person has the necessary authority to do so. This authorisation is commonly referred to as a Power of Attorney.
A Power of Attorney is a formal document in terms of which the Principal (the person who provides the authority) empowers an Agent (the person entrusted with the authority) to conclude certain juristic acts on his behalf. In other words, a Power of Attorney is a formal document in terms of which someone gives their Agent the authority to conclude specific acts on their behalf.
It is however important to note that accordingly, a Power of Attorney is automatically and by legal implication revoked when the Principal becomes mentally incapacitated, insolvent or passes away.
The signing of a Power of Attorney does not only authorise the Agent to act, but also informs third parties that the Principal intends to be bound by the acts performed by his Agent. In terms of our law, an Agent may only perform such acts as the Principal himself has the legal capacity to perform, and no more. This is because South African law of agency is founded on the principle that an Agent cannot do that which his Principal has no capacity to do himself.
Thus at the death of the Principal, is the reasoning that the deceased cannot conclude any juristic acts himself anymore and as such the authority conferred on the Agent to perform juristic acts also ceases on the death of the Principal. Kindly note that this will be the legal position, irrespective of the wording of the Power of Attorney, even when the Principal attempts to cater for the situation of his death in the authorisation document.
An example of such a Power of Attorney is when an Agent has entered into and completed an agreement of sale. This agreement will thus be legally binding. Should the person who gave the Power of Attorney pass away after the signing of the agreement but before the conclusion thereof, the agreement will still be enforceable, and the appointed Executor of the estate will be able to finalise the sale and transfer of the property into the name of the purchaser. If the agreement was signed after date of the passing, the agreement would not be binding.
It follows that the Agent’s power to act in terms of the lapsed Power of Attorney ceases on the Principal’s death. The rationale behind this is that, since the Principal can no longer act personally, the Agent can’t act on his behalf. The power to act on the Principal’s behalf shifts on the Principal’s death from the Principal to the Master of the High Court and thereafter, once Letters of Executorship are issued, to the Principal’s executor or trustee respectively.
Thus to conclude: If the Principal is no longer able to conduct certain acts, then neither is the Principal’s Agent.