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Agency Contract Format: Risks and Precautions

Agency Contract Format: Risks and Precautions

A power of attorney is one of the most widely used legal instruments in the UAE, allowing a principal to authorise another person to carry out acts on their behalf without being personally present. However, this authorisation — especially when drafted in broad, general terms — can turn from a tool of convenience into a genuine risk to the principal's money and property.

In this guide, AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS explains the format of a general power-of-attorney contract, the key risks associated with it, and the precautions that must be observed before signing or notarising it.

What Is a General Power of Attorney and How Does It Differ From a Special One?

A power of attorney is a contract by which the principal appoints another person to stand in their place for a permissible, defined act. It may be unrestricted, restricted, conditional, or deferred to a future time. By scope, powers of attorney fall into two main categories:

Special Power of Attorney

Limited to one or more specifically defined matters set out in the deed, which the agent may not exceed, although they may carry out necessary ancillary steps required to complete them.

General Power of Attorney

Not tied to a specific matter, and in principle covers only acts of administration and safekeeping, such as receiving documents and dealing with government departments and banks. Acts of disposition that transfer ownership, such as sale and mortgage, do not fall within the agent's powers unless expressly stated in the deed — the same applies to gifts, which require a specific authorisation.

Essential Elements a Power-of-Attorney Deed Must Include

Clauses That Must Not Be Omitted When Drafting a Power of Attorney
  • Fully and precisely identifying the principal and the agent (name, ID or passport number, nationality).
  • Specifying the type of power of attorney (general or special) and the acts authorised to the agent in clear, unambiguous terms.
  • Expressly stating any acts of disposition transferring ownership, where intended, rather than relying on broad general wording.
  • Setting a term for the power of attorney or tying it to the completion of a specific task, rather than leaving it open-ended.
  • Stating whether the agent may appoint a substitute agent — since an agent has no such right unless expressly authorised.
  • Notarising the deed before a notary public or a licensed private notary, with both parties present in person.

Key Risks of a General Power of Attorney to the Principal

A General Power of Attorney Is Among the Riskiest Forms
  • The agent may exceed the scope of authorisation and dispose of the principal's money or property for personal gain — which constitutes a misappropriation of the principal's assets.
  • Broad, vague wording may be used to justify acts the principal never intended, such as selling assets or transferring ownership without their knowledge.
  • The power of attorney may remain valid after the need for it has ended, or after the relationship for which it was granted has come to an end, if the principal fails to formally revoke it.
  • Failure to notify the agent of revocation through the correct legal method means the agent's subsequent acts remain enforceable against third parties, even if the principal genuinely intended to end the power of attorney.
  • Granting a power of attorney to more than one person without specifying whether they act jointly or individually may create conflicting acts.

Precautions to Observe Before Signing a General Power of Attorney

Before Granting Anyone a General Power of Attorney
  • Only grant a general power of attorney to someone you trust completely, since the arrangement is fundamentally built on personal trust in the agent's integrity, experience, and competence.
  • Never sign a deed containing vague, general wording without reading it and understanding every clause; part of the notary's role when authenticating a deed is to explain the powers granted to the principal and confirm their understanding of its content.
  • Avoid leaving the term of the power of attorney open-ended, and it is practically advisable not to extend it for long periods without periodic review.
  • Keep a copy of the deed and review it periodically to confirm the need for it still exists.
  • Move immediately to revoke the power of attorney if the agent takes any action that raises concern, once its purpose has been fulfilled, or once the relationship on which the trust was based has ended.

How Does a Power of Attorney End, and When Must an Agent Be Revoked Immediately?

A power of attorney ends upon completion of the authorised act, upon expiry of its stated term, upon either party losing legal capacity, or upon the death of the principal or the agent. It also ends when the principal revokes the agent, or when the agent withdraws — in which case the agent remains obliged to bring any work already begun to a point where no harm to the principal is likely.

Revoking an Agent: The Correct Procedure

A mere intention by the principal to end the power of attorney is not enough; the revocation must be formally notified to the agent in writing through one of the legally prescribed methods, such as notice through a notary public, registered mail, or an agreed email address used for correspondence between the parties, and where these are not possible, notice by publication in a widely circulated newspaper. Without proper notification of the revocation, the agent's acts remain enforceable against third parties acting in good faith, and the principal bears the consequences.

This does not prevent the principal from seeking compensation from the agent for any harm caused by an act carried out after the agent was notified of the revocation.

Administration only
The scope of a general power of attorney, unless disposition is expressly stated
In writing
The mandatory form for notifying an agent of revocation for it to take effect
Notary Public
The authority responsible for notarising the deed with both parties present

Practical Legal Tips

Before, During, and After the Power of Attorney
  • Engage a lawyer to draft the deed instead of using generic ready-made templates, to ensure the powers are precisely defined for your purpose without unintended scope.
  • Ask for powers to be listed clause by clause rather than relying on a single broad phrase covering "whatever is necessary".
  • Do not hesitate to request a certified copy of the deed to keep and review periodically.
  • If you have doubts about the agent's conduct, consult a lawyer immediately before taking the step of revocation, so the legal position is documented correctly.

Legal References

Legislation Relied Upon in This Guide
  • Federal Law No. 5 of 1985 on the Civil Transactions Law and its amendments — Federal Law (provisions on agency).
  • Federal legislation governing the notarisation profession and notary-public procedures in the UAE.
 
Before signing any general or special power of attorney
The team at AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS reviews the wording, defines the powers appropriate to your purpose with precision, and follows up on revocation procedures when needed.
 

Frequently Asked Questions

Q Does a general power of attorney authorise the agent to sell the principal's property?
No. A general power of attorney, in principle, covers only acts of administration and safekeeping. Acts of disposition that transfer ownership, such as a sale, do not fall within the agent's powers unless expressly stated in the deed.
Q How can I revoke an agent before the power of attorney's term ends?
The agent must be notified in writing of the revocation through one of the legally prescribed methods, such as notice through a notary public or registered mail — otherwise the agent's acts remain enforceable against third parties acting in good faith, regardless of the principal's intention to end it.
Q Does a power of attorney automatically end upon the principal's death?
In principle, a power of attorney ends upon the death of the principal or the agent, or upon either losing legal capacity. However, acts carried out before the agent learns of the death may raise legal questions requiring independent assessment case by case.
Q Can an agent appoint someone else in their place?
No, an agent may not appoint a substitute to carry out the authorised acts unless the deed expressly grants them that right.
Q What is the validity period of a general power of attorney?
A specific term may be set for the power of attorney, or it may be tied to the completion of a particular task; it is practically advisable not to leave a general power of attorney in effect for long periods without periodic review, to avoid broad powers continuing after the need for them has ended.
Q What should I do if the agent exceeds the powers granted to them?
An agent acting beyond the scope of the power of attorney constitutes a misappropriation of the principal's assets, and the principal is legally entitled to claim for any resulting loss; it is advisable to contact a lawyer immediately to assess the situation and take the appropriate steps.
Specialised Legal Consultation on Drafting and Notarising Powers of Attorney
✓ Drafting a power-of-attorney deed with clearly defined powers that serve your purpose without unintended scope
✓ Reviewing existing powers of attorney and identifying risky clauses
✓ Following up on the correct legal procedure for revoking an agent
— Lawyer Awadh Almheiri
Legal Disclaimer
This content is prepared for general legal awareness purposes and does not constitute legal advice or a substitute for it, since every power of attorney and every case is subject to its own wording and circumstances. For an accurate legal review of a specific deed, please contact AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS directly. In the event of any discrepancy between this translation and the original Arabic text, the Arabic text shall prevail.
Drafting and Notarising Powers of Attorney in Dubai
AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS drafts and reviews general and special power-of-attorney deeds before notarisation, and follows up on agent-revocation procedures before the notary public in Dubai, so as to protect the principal's rights.
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Our power-of-attorney drafting and review services extend to Abu Dhabi, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah, taking into account the notary-public procedures applicable in each emirate.