Authorization contract is a type of civil contract and are widely used in all spheres of life. When an individual wishes to give another individual his or her rights legally, that person will perform the act of authorization. To record this act, an authorization contract or a power of attorney should be made. The difference between these two types of documents is that the authorization contract requires the consent of both parties, while the power of attorney may only require one party to force the other to follow that order. According to the definition of the Civil Code 2015, an authorization contract means an agreement between parties whereby an attorney has the obligation to perform an act in the name of a principal. The principal shall only be required to pay remuneration if so agreed or so provided by law.
Form of authorization contract: The parties may agree on the form of the contract, but in other cases stipulated by law, the contract must be in writing (notarization may be required).
Content of the authorization contract:
- Information of parties: the principal and the attorney;
- Scope of authorization: This is a particularly important part that the parties need to clarify. The scope of the authorization should specify the work to be done in order to avoid the abuse of the right by the authorized party. However, if the scope of the authorization is too narrow, then the authorizing party will need to make a new contract if it wants the receiving party to perform work that is not within this scope, which is time-consuming;
- Period of Authorization: if the contract does not specify this provision, If there is no agreement and the duration is not provided by law, the authorization contract shall be effective for one year from the date on which the authorization is made;
- Rights and obligations of the parties: based on Article 565 – Article 568 of the Civil Code 2015, apart from the rights and obligations stipulated by law, the parties may agree on additional rights and obligations depending on the On the nature of authorized work, exempt from the rule of law;
- Remuneration (if any): should specify the amount of remuneration, method and time of payment;
- Argument setllement;
- Other agreements not agaisnt the law.
- Authorized party can only be a specific person (not an organization or a group of people).
- The authorizing party can not authorize other party to do the work that does not belongs to their authority.
- The principal and the attorney have the right to unilaterally terminate the contract at any time, but there are some notes as following:
- For authorization involves in remuneration, the authorizing party upon termination must pay remuneration corresponding to the work performed for the attorney and pay damages. With respect to authorization without remuneration , when unilaterally terminating the contract, the authorizing party shall notify the authorized party in advance “for a reasonable period of time”;
- Similarly, the attorney must also notify the pricipal in advance when unilaterally terminate the contract; compensate for damage (if any) for the principal if that is an authorization contract with remuneration .