‘X’ who is the owner of a property, enters into an agreement to sell property with ‘Y’ and upon receipt of consideration, executes an agreement to sell...Discuss.

Question: ‘X’ who is the owner of a property, enters into an agreement to sell property with ‘Y’ and upon receipt of consideration, executes an agreement to sell and power-of-attorney in favour of ‘Y’ authorizing him to sell, mortgage, or part with the property. There was no clause that it would not be revoked. Subsequently, ‘X’ revokes the power-of-attorney executed in favour of ‘Y’. Could he do so? Discuss. [Punjab JS 2007]

Find the answer to the mains question of the Law of Contract only on Legal Bites. [‘X’ who is the owner of a property, enters into an agreement to sell property with ‘Y’ and upon receipt of consideration, executes an agreement to sell and power-of-attorney in favour of ‘Y’ authorizing him to sell, mortgage, or part with the property. There was no clause that it would not be revoked. Subsequently, ‘X’ revokes the power-of-attorney executed in favour of ‘Y’. Could he do so? Discuss.]

Answer

In the given scenario, 'X' is the owner of a property and enters into an agreement to sell the property with 'Y'. Upon receiving the consideration, 'X' executes an agreement to sell and a power of attorney in favour of 'Y', granting 'Y' the authority to sell, mortgage, or part with the property. However, there is no specific clause in the agreement stating that the power of attorney cannot be revoked. Subsequently, 'X' revokes the power of attorney executed in favour of 'Y'. Now let's discuss whether 'X' can indeed revoke the power of attorney in detail.

The revocation of a power of attorney depends on the terms of the power of attorney, the applicable laws, and the circumstances of the case. Here are some important aspects to consider:

Power of Attorney:

A power of attorney is a legal document that grants authority to one person (the agent or attorney-in-fact) to act on behalf of another person (the principal) in legal or financial matters. The power of attorney can be general, giving broad authority, or specific, granting limited authority for particular actions.

Revocability of Power of Attorney:

In most jurisdictions, a power of attorney is revocable unless specifically stated otherwise. However, the revocation must be done in accordance with the applicable laws and any terms specified in the power of attorney document itself.

Terms and Conditions:

The terms and conditions of the power of attorney are crucial. If the power of attorney document contains a specific clause stating that it cannot be revoked, 'X' may not be able to revoke it unless exceptional circumstances exist. However, in the given scenario, there is no mention of such a clause.

Legal Formalities:

The revocation of a power of attorney generally requires compliance with certain legal formalities. These can include providing written notice of revocation to the agent, ensuring proper service of the notice, and following any specific procedures mandated by the jurisdiction's laws.

Rights and Liabilities:

Upon the revocation of a power of attorney, the agent's authority to act on behalf of the principal is terminated. The principal may no longer be bound by any actions or decisions made by the agent after the revocation, provided that third parties are duly notified of the revocation.

Considering the above points, 'X' may have the right to revoke the power of attorney executed in favour of 'Y' if the document does not contain a clause preventing revocation. However, 'X' must follow the necessary legal procedures and provide proper notice of revocation to 'Y' and any relevant third parties who may have dealt with 'Y' based on the authority granted in the power of attorney.