What is the general power of attorney

Powers of attorney: overview of types, differences and patterns

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In companies, powers of attorney are regularly granted with which one person takes on tasks for another. Without these powers, most companies would not be able to act. The different power of attorney and representation regulations are not always known and are often complex. This makes it difficult to differentiate between the individual options and to understand the authority to act. What powers of attorney are there? Who can grant powers of attorney? We are investigating these questions. You can also get tips on how to write a power of attorney yourself and templates here ...

➠ Content: This is what awaits you

➠ Content: This is what awaits you

Definition: what are powers of attorney?

A power of attorney certifies that a person is authorized to represent. She can take on tasks or business on behalf of another person. Anyone who delegates power of attorney to another person is referred to as the principal. The person in possession of this power of attorney becomes the proxy. Powers of attorney are common in both private and business contexts. For example, when buying a new car, you can give the dealer a power of attorney so that he can de-register the old car or register the new one with the road traffic office. Powers of attorney for banks or health insurance companies are also widespread.

Powers of attorney can also be valid orally, although it makes more sense to fix them in writing. So-called highly personal legal transactions are excluded from powers of attorney. They are not transferable and can only be taken in person. Authorized representatives are also not allowed to use their position to do business with themselves for the other person. To this end, Section 181 of the German Civil Code regulates the prohibition of self-contracting.

Difference between external power of attorney and internal power of attorney

In the initial phase, founders and self-employed people usually do all the important tasks themselves. Especially when the business is still clear and there are no employees who could take on the tasks. From a certain company size, more people are needed who can be entrusted with important decisions and tasks. In order to describe the legal relationship to one another, a distinction is made between the following terms, depending on the parties involved:

  • The Internal power of attorney describes the relationship between the principal and the authorized representative.
  • The External power of attorney regulates the relationship between authorized representatives and other persons or institutions.

Types: What kind of powers of attorney are there?

Different powers of attorney constitute a representation arrangement, but differ in important points. If someone does not know the rights of individual powers of attorney, they may exceed their competencies. Anyone who takes care of business or makes decisions that he is not authorized to make may be liable for damages. We introduce you to four common types of powers of attorney and show you the differences:

The general power of attorney

This power of attorney is the most extensive of all powers of attorney; only highly personal transactions from family and inheritance law are excluded. For example, a marriage or the drawing up of a will cannot be delegated to an agent. One or more persons who are of legal age and capable of doing business can be authorized. Since it is so extensive, this power of attorney is suitable if the principal fears that he will not be legally competent in the event of illness.

Legal transactions that are clearly aimed at harming the person represented are not covered by the general power of attorney. As with all powers of attorney, the written granting is not mandatory (except for the sale of real estate), but can be implied. A written power of attorney is strongly recommended in order to avoid misuse. In contrast to the authorized signatory, holders of a general power of attorney may conclude highly personal legal transactions with the principal. This can include the following powers:

  • Filing for bankruptcy
  • Signing the tax return
  • Signing of annual accounts
  • Application for entry in the commercial register
  • Sale or encumbrance of land
  • Granting of power of attorney

The general power of attorney also makes sense in the private sector, since in an emergency the local court appoints supervisors: It is a widespread mistake that in the event of the loss of legal capacity, the spouse or other family members would automatically be entitled. The points listed in an advance directive are often also part of a general power of attorney.

The power of attorney

Prokura is directly in second place of all powers of attorney. Only the owner or the legal representative of a company can appoint a person as an authorized officer. In the case of a GmbH, the managing director and, in the case of a stock corporation, the board of directors can grant power of attorney. In addition, the power of attorney must be entered in the commercial register. The authorized signatory has the right to conduct all judicial and extrajudicial business. The only exceptions are the sale or encumbrance of land, the dissolution of the company, making entries in the commercial register or signing balance sheets and tax returns. In addition, an authorized signatory cannot grant power of attorney himself or pass on his powers.

However, it is possible to limit the rights of an authorized signatory internally. For example, individual powers to act can be excluded. In addition, a distinction must be made between individual and total power of attorney. With a single power of attorney, the authorized signatory can represent the company alone. The full power of attorney requires that another authorized signatory or a legal representative of the company agrees and, for example, also signs documents.

The power of attorney

With the power of attorney, the proxy is entitled to take care of business, decisions and actions in a specific trade. This type of power of attorney has fewer powers than the power of attorney, which relates to actions in all of the company's trades. A distinction is made between three types of power of attorney:

  • General power of attorney: It allows the authorized representative to carry out all normal commercial business.
  • Type of power of attorney: The authorized representative has the right to carry out all transactions of one type - for example in purchasing or sales.
  • Special power of attorney: This power of attorney is limited to a specific transaction, such as the conclusion of a contract with a specific customer.

A power of attorney can be granted by the legal representatives of a company, but also by authorized signatories or other authorized representatives, if they have the appropriate right to do so. Unlike the power of attorney, such a power of attorney is not entered in the commercial register.

Sub-power of attorney

In the case of sub-power of attorney, a power of attorney is transferred for a certain period of time so that business can continue during this time. Classic examples are vacation or illness of the originally authorized representative. However, this is not easily possible. Only if the proxy has been authorized to grant sub-powers of attorney can he do this. A power of attorney does not automatically mean the right to pass on the powers.

Template: Sample and form for a general power of attorney

Power of attorney
Name first Name
Place and date of birth
Street, house number
Postcode / town
Telephone number / email

Authorized representative
Name first Name
Place and date of birth
(ID card number)
Street, house number
Postcode / town
Telephone number / email

I hereby authorize the person named above to represent me without restriction in and out of court (towards banks, authorities, courts and third parties) in all legally permissible matters and to exercise these, insofar as claims that have been or are to be asserted exist.

I authorize the authorized representative to carry out all legal transactions and legal acts in a binding manner that can be carried out by me and me in accordance with the statutory provisions and for which the law considers a proxy / power of attorney to be permissible.

The scope of the power of representation includes in particular:

  • Representation in relation to private individuals, all authorities and all public bodies such as courts, tax authorities, banks and offices
  • making and receiving payments
  • the conclusion of legal transactions
  • Tax matters
  • the disposal of my property
  • the exercise of the rights and obligations from my rental agreement for the rental apartment and its termination
  • the conclusion and termination of a new apartment rental agreement
  • receiving and opening mail addressed to me
  • the representation in all legal matters as well as the selection of the legal advisor
Place and date
Place and date
Signature of the principal
Signature of authorized person

We are providing this example as a free sample. You can download the Word file here:

General power of attorney template

Template: sample and form for a power of attorney

Power of attorney
John Doe
born on dd.mm.yyyy in Hamburg
Musterstrasse 1
12345 Neustadt

Authorized representative
Sebastian Schmidt
born on dd.mm.yyyy in Münster
(ID card number: T22 111 123)
Hauptstrasse 10
12345 Neustadt

I hereby grant you power of attorney for the HR department of our company, Max Mustermann AG, with effect from dd / mm / yyyy. This power of attorney is limited to the tasks that are typical for the department and regularly occurring transactions.

In particular, it is stated that the power of attorney granted does not include the authority to negotiate financial matters that could burden the company. These tasks and areas always require the approval and signature of an authorized signatory or the managing director.

It should be noted that documents and other documents with the addition in power of attorney or i.V. must be marked.

John Doe

We are providing this example as a free sample. You can download the Word file here:

Model power of attorney

Overview: private powers of attorney and dispositions

In a private setting, people often give power of attorney in the event that they become incapable of doing business in the event of illness. Family members or close confidants are usually given the opportunity to take care of important things. However, various powers of attorney can also be granted without a triggering reason. The crucial difference between dispositions and powers of attorney: a power of attorney is valid as long as the principal himself is still able to act. A ruling, on the other hand, only comes into force when the person concerned is no longer capable of making a decision. The most important powers of attorney and dispositions at a glance:

Power of attorney

If you want to cover yourself if you are unable to make a decision in the event of illness, you should issue a health care proxy. Similar to the general power of attorney, it allows transactions to be carried out and declarations to be made on behalf of the principal. The exact design and thus the specific legal transactions can vary from person to person. In this case, it is important to draw up the power of attorney in good time, as the principal must be legally competent. Anyone who does not give anyone a power of attorney and suddenly can no longer make independent decisions will be assigned a legal representative. Neither your own children, partners or relatives will automatically receive the power of attorney if you have not arranged it beforehand.

Power of attorney

A so-called bank power of attorney is required in order to have someone else take over financial and banking affairs. This is usually set up together directly in the branch of the bank. It is particularly important that both the principal and the authorized representative are present, as both must sign the authorization. The power of attorney allows access and control of accounts and safe deposit boxes. However, there are certain restrictions here, so the authorized representative cannot overdraw an account or have it overwritten in his name. Many banks insist that principals and agents use special bank forms to set up.

Living will

The living will is also a power of attorney in the broader sense. Specifically, it is about recording how you want to be treated if you can no longer express your will for health reasons. They regulate whether and which examinations, curative treatments and medical interventions are carried out on you.

Custody order

With this ruling, one or both parents can regulate who should take care of the minor child (s) in the event of the death of the parents. Since this is a very special decree, it must be handwritten and signed in order to be valid. In this sense, the custody order is comparable to the will.

Checklist: How do I write powers of attorney?

In the event that you would like to write a power of attorney yourself, we have put together a few things that you should pay attention to. If you want, you can download the list HERE and use it as a practical checklist.

Name those involved
In our model power of attorney, we have shown it: The person who issues the power of attorney (principal) must be named just as clearly as the person to whom the power of attorney is given (proxy). This includes:

  • First and Last Name
  • Place and date of birth
  • (if available) ID card number

You can enter the address of the proxy, but you don't have to, as this can change quickly if you move.

Describe the scope
In the next step, you should explain as precisely as possible what the power of attorney relates to. What the authorized representative is allowed to do with the power of attorney and, above all, what he is not allowed to do. It is better to be more detailed than too short. If the power of attorney is too briefly outlined, the proxy could run into problems if the powers for the planned legal transaction are insufficient.

Formulate the scope
Another problem that can arise if you do not write the power of attorney specifically enough is also related to the scope. It is quite possible that the authorized representative assumes that they have more competencies than you actually wanted to grant them. If official bodies also come to this conclusion, this may have disadvantages for you. You should therefore formulate the power of attorney as specifically as possible and avoid statements that are too general.

Define the validity period
The power of attorney must not be missing an indication of how long it should be valid. Be sure to state either the date or a condition that must be met for the power of attorney to expire.

Add signature and date
A power of attorney is only valid if you put your signature underneath and do not forget the date on which you wrote the document.

How long is a power of attorney valid?

The end of a power of attorney depends on its content. This means that there may be a time limit or a condition that must be met. In addition, a revocation is possible at any time, unless you have previously created an irrevocable power of attorney - this would then have been specifically recorded in the power of attorney. Revocation is possible for good reason: Powers of attorney (especially general powers of attorney or powers of attorney) give the authorized representative a great deal of leeway.

This is always based on trust. However, if this trust is lost for any reason, you as the principal must still have the opportunity to exercise your rights. In the event of a revocation, you should contact the authorized representative in writing and withdraw the power of attorney. The receipt of the revocation ends the internal relationship. In the event that you have issued a power of attorney to a third party - for example for tax matters - you must declare your revocation there. In this case, the outside relationship is ended.

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