Power of attorney is one of the most widely used legal instruments in everyday life, enabling individuals and companies to authorise others to carry out legal acts and transactions on their behalf. Despite the flexibility and convenience it offers, it can become a source of complex legal disputes when broad powers are granted without proper consideration, or when it is used beyond its intended purpose.
Misuse of Power of Attorney in the UAE: Legal Risks, Consequences, and How to Protect Yourself
I. What Is a Power of Attorney?
A power of attorney is a contract by which a person known as the "principal" authorises another person known as the "agent" to carry out one or more legal acts on the principal's behalf, within the limits of the powers granted.
Special Power of Attorney
A single, defined act
Limited to a specific act such as selling a particular property or managing a specific case. Its scope is narrow and its risk lower.
General Power of Attorney
Broad, wide-ranging powers
Encompasses comprehensive powers over finances, real estate, companies, and financial rights. Requires extreme caution before it is granted.
⚠ Important Warning
The danger of general powers of attorney lies in the fact that they may vest the agent with extensive authority over money, real estate, and companies — making extreme caution not an option but a necessity before granting one.
II. When Does a Power of Attorney Become a Source of Risk?
The legal risks of a power of attorney typically arise in the following situations:
Granting powers broader than actually needed
Signing the power of attorney without reading it in full
Relying on personal trust without considering the legal implications
Failing to set a time limit on the power of attorney
Allowing the power of attorney to remain in force for long periods without review or revocation
Granting powers relating to the sale of real estate, management of companies, or disposal of funds without oversight
III. The Most Common Cases Arising from Misuse of Powers of Attorney
Sale of property without the owner's knowledge
Using the power of attorney to sell or mortgage a property without the genuine owner's consent, leading to complex real estate disputes with third parties.
Disposing of company shares
Transferring ownership of company shares or altering the management structure under a general power of attorney without the partner's or principal's knowledge.
Withdrawing funds from bank accounts
Exploiting banking authorisations to withdraw large sums or transfer them to other accounts in an unlawful manner.
Entering into contracts or settlements
Concluding binding contracts or judicial settlements on the principal's behalf on unfavourable terms or without referring to the principal.
IV. Is It Sufficient to Claim Ignorance of the Power of Attorney's Contents?
"I signed the power of attorney but I did not know it contained these powers."
This defence — common as it is — is rarely sufficient on its own before the courts.
The established legal principle is that signing a document is treated as evidence of knowledge of its contents and acceptance of what it contains. Merely claiming failure to read or understand is generally insufficient to invalidate the power of attorney or the acts carried out under it, unless accompanied by other legal grounds such as:
Fraud or misrepresentation
Unlawful exploitation of trust
A fundamental defect in consent
ℹ Legal Note
The assessment of these matters remains subject to the discretion of the court based on the circumstances of each case and the evidence presented. Every case differs from another according to its specific facts.
V. Civil and Criminal Liability of the Agent
If the agent exceeds the limits of the power of attorney or exercises its powers in a manner that causes harm to the principal, civil liability may arise upon proof of three elements:
Fault — the agent's breach of the limits of the powers granted
Damage — actual loss or harm suffered by the principal
Causation — a direct causal link between the fault and the damage
In more serious cases, the matter may extend beyond civil liability to criminal liability, particularly if the agent's acts are accompanied by criminal conduct such as:
Forgery and use of forged documents
Misappropriation of funds by unlawful means
VI. Is the Notary Responsible for Explaining the Effects of a Power of Attorney?
Many believe that notarising a power of attorney means the notary is responsible for explaining all its legal effects to the principal. In reality, the notary's role is confined to:
Verifying the identity and legal capacity of the person concerned
Confirming that consent has been given in a sound manner
Completing the notarisation procedures in accordance with the law
Verifying that the document does not contravene the law or public policy
ℹ The Difference Between a Notary and a Lawyer
Providing detailed legal advice, assessing whether the power of attorney serves the principal's interests, and explaining all potential future risks is the role of a lawyer or legal adviser — not the notary. Notarising a power of attorney does not transfer the responsibility of reading and understanding the document from the principal to the notarising authority.
VII. The Lawyer's Role in Preventing Power of Attorney Risks
Reviewing the power of attorney
Examining all clauses before signing and identifying any excessive or dangerous powers.
Restricting the powers
Limiting the powers to the minimum strictly necessary to achieve the actual intended purpose.
Setting a time limit
Establishing a clear expiry date so the power of attorney does not remain in force indefinitely.
Restrictions on financial transactions
Placing clear and specific limits on acts relating to real estate, funds, and companies.
Explaining the legal consequences
Clarifying the obligations and liabilities that flow from each clause of the power of attorney.
Suggesting alternatives
Identifying safer and less risky legal structures when needed to achieve the same objective.
VIII. How to Address Problems After a Power of Attorney Has Been Issued
If you discover a problem relating to a power of attorney that has already been issued, it is important to act quickly without delay:
01
Explore the possibility of revoking the power of attorney or dismissing the agent
Review the available legal procedures for terminating the power of attorney and notifying the relevant parties where necessary.
02
Gather documents and evidence
Identify all acts performed under the power of attorney and collect the related documents and proof.
03
Request a full account of the acts performed
Obtain a statement of all transactions carried out under the power of attorney from the relevant authorities.
04
Obtain specialist legal advice
Accurately assess the legal position with a specialist lawyer to identify the available options and the best course of action.
05
Take the appropriate legal proceedings
File civil or criminal claims where damage or misconduct has occurred, bearing in mind that delay may complicate the legal position.
IX. Frequently Asked Questions
Can a power of attorney be revoked at any time?
In principle, the principal has the right to revoke the power of attorney and dismiss the agent at any time, unless it is linked to the right of a third party or expressly provides otherwise. However, revocation must be carried out formally and the relevant parties must be notified for it to be enforceable against third parties.
Is a notarised power of attorney safer than an unnotarised one?
Notarisation strengthens the legal authority of the power of attorney and establishes proof of its due execution. However, it does not in itself mean that its contents are safe or that its powers are limited. A notarised power of attorney containing broad powers remains dangerous regardless of its notarisation.
Is the agent permitted to sub-delegate?
An agent may sub-delegate if the principal expressly authorises it or if the nature of the power of attorney so implies. If sub-delegation occurs without authorisation, the agent may be held liable for the acts of the sub-agent.
Does a power of attorney terminate upon the principal's death?
In principle, a power of attorney terminates upon the death of either the principal or the agent. However, this may differ in certain cases — particularly in powers of attorney linked to the interests of third parties or in commercial powers of attorney. Legal advice should be sought to assess each case individually.
What is the difference between a power of attorney and a management contract?
A power of attorney authorises the agent to carry out legal acts on behalf of the principal, whereas a management contract governs the contractual relationship between two parties for the management of an asset or project. Each has different legal provisions and effects, and legal advice is recommended before choosing the appropriate instrument.
Is oral revocation of a power of attorney sufficient?
Oral revocation is generally insufficient. Revocation must be documented and the agent and all parties who have dealt with the agent must be notified, so that the revocation is enforceable against all and cuts off any claim that the power of attorney remains in force.
X. Legal Tips Before Granting Any Power of Attorney
Grant a general power of attorney only when absolutely necessary
Always start with a specific, limited power of attorney. A general power of attorney should be the exception, not the rule.
Read all clauses carefully before signing
Never rely on personal trust alone. Ask for clarification of any unclear clause before signing.
Keep a copy of the power of attorney
Request a notarised copy and keep it in a safe place so you can refer to it when needed.
Specify only the required powers
Be precise about the powers you grant and avoid vague or broad wording.
Set a specific time limit
Review granted powers of attorney periodically and revoke any that are no longer needed in a timely manner.
Engage a lawyer for sensitive powers of attorney
Any power of attorney involving real estate, companies, or funds requires legal review before it is granted.
Specialised Legal Consultation
Are you facing an issue with a power of attorney, or do you need one reviewed before it is signed?
The team at Awad Al Mehiri Law Office is ready to help you protect your rights from the legal risks associated with powers of attorney — both before they are granted and after a dispute has arisen.
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Reviewing the power of attorney and limiting unnecessary powers
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Assessing the legal position where misuse of a power of attorney is suspected
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Taking the legal steps necessary to recover rights
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Legal representation in civil and criminal disputes involving powers of attorney
Contact Awad Al Mehiri Law Office for expert legal counsel and to take the necessary steps to safeguard your rights.
Disclaimer
The information in this article is of a general legal and informational nature, based on the legal principles applicable in the United Arab Emirates. It does not constitute specialised legal advice and should not be relied upon as the sole basis for any legal decision. Legal situations vary according to their specific circumstances and facts. Readers are advised to consult a qualified legal specialist for advice tailored to their individual situation.
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