One-sided contract term of the day (5): powers of attorney

We continue our series highlighting IP Draughts’ “favourite” one-sided provisions in contracts.  These provisions are often found in contracts where there is an imbalance of power between the parties, and where the party with the power (let us call him the “Patron”) seeks to reduce a sometimes theoretical risk by imposing it on the other party (the “Supplicant”).

Today’s one-sided term is:

The Supplicant hereby irrevocably appoints the Patron as his Attorney in his name to execute any document and do any act or thing which the Patron considers necessary or desirable to comply with the Supplicant’s obligations under this Agreement.

A provision of this kind sometimes appears in intellectual property assignments.  For example, IP Draughts has seen such a provision in many assignments of inventions from an academic inventor to his employing institution.

The provision gives the Patron the legal power to sign documents in the name of the Supplicant and make the Supplicant be bound by those documents as if the Supplicant had signed them. For present purposes, we are considering a general power of attorney and are not considering the special type of power of attorney that is obtained from an elderly person who is becoming infirm and who wants a near relative to look after their affairs.

An argument that is used for including such a provision is that the inventor may leave the institution and be difficult to locate.  It may be necessary to file documents with national Patent Offices at short notice, and the patent application should not be delayed or prejudiced by the absence of an inventor’s signature on a document.

This is a valid argument, particularly in the case of a student inventor who leaves a university without giving the academic department a forwarding address, or who uses their parent’s address and collects post from the parental home on an infrequent basis.

On a personal level, IP Draughts would be uneasy about giving anyone a power of attorney and as far as he can recall (!) he has never done so.  In the unlikely event of him becoming an inventor and assigning his invention, he would prefer to make reliable arrangements for ensuring that he can be contacted at short notice to execute documents.

Giving someone a power of attorney when both parties are on the same side or, to use the jargon, “their interests are aligned” is understandable.  Less understandable, from IP Draughts’ perspective, is giving someone a power of attorney so that they can force you to do something that you don’t want to do.  Occasionally, the latter provisions appear in contracts.  It might say something like, in situation X you will bring legal proceedings against Y and if you refuse to do so we can do so in your name, and to that end you sign this power of attorney.  A party would want to think very hard before agreeing to this kind of provision.

Another variant is the power of attorney that an overseas patent attorney sometimes asks a client to sign, to enable the patent attorney to represent the client before a national Patent Office.  That last sentence is confusing, in that the word attorney is used in slightly different senses in the phrase “power of attorney” and “patent attorney”.  IP Draughts was tempted to substitute “patent agent” to make it easier to read, but that might lead us down the blind alley of discussing the conceptual difference between an agent and an attorney.  That will have to wait for another day.  For a discussion of the difference between an attorney-at-law and an attorney-in-fact, as those terms are used in the US, see this Wikipedia article.

In principle, it seems understandable that (a) a patent attorney/agent (let’s call him a representative, to avoid confusing IP Draughts’ mind any further) may require written authority to act on a client’s behalf before a national Patent Office, and (b) the representative requires the authority to be in the form of a power of attorney (although that would not a conventional way of appointing a representative in the UK).

What is less understandable, from IP Draughts’ perspective, is the detailed wording of some of the powers of attorney that overseas representatives require to be signed.  IP Draughts has seen documents that give very broad authority to open bank accounts, purchase land, employ staff, commence and settle litigation, etc.  Sometimes, the representative is not willing to change wording in their template, and sometimes clients are not willing to spend time and money in debating the wording.  In those circumstances, the best you can do may be to point out the issue and let the client take a view on whether the risk is one they are willing to take.

IP Draughts’ scoring for extremeness: 7/10


Filed under Contract drafting, General Commercial

2 responses to “One-sided contract term of the day (5): powers of attorney

  1. Reblogged this on IP Draughts and commented:

    This ancient post is apparently trending, so IP Draughts thought he should re-post it. Two additional points not made in the post are:
    1. If the power of attorney is granted under English law, it must be executed as a deed (see articles on this blog about the signature blocks that are required for deeds); and
    2. IP Draughts understands that where a power of attorney is made under US laws and is “coupled with an interest” it may be irrevocable. Around 30 years ago, IP Draughts did look into whether one could appoint someone as an agent under English law and make the appointment irrevocable, by analogy with US laws, but he can’t remember what his conclusion was. If this works under English law, it might be an alternative to a formal appointment as an attorney via a deed. If someone would like to do the research and tell IP Draughts the answer, he would be pleased to hear it!

  2. Vicky Clark

    I totally agree that powers of attorney should be treated with utmost caution. However from a practical point of view, a number of years ago I had experience of a spin out company which used such a right to enable it to resolve a dispute with a founder who was unfairly withholding his signature from patent documents, as a means of exerting unreasonable pressure on the company. The company quite sensibly obtained the authority of the court before exercising the power but it proved to be a valuable tool to unlock the conflict between the parties.

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