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Legal Memorandum: Incompetence of Attorney-in-Fact in MN

Issue: Under Minnesota law, may contracts entered into by an attorney-in-fact under a properly executed power of attorney be avoided because of the incompetence of the attorney-in-fact who was granted power?

Area of Law: Business Organizations & Contracts, Litigation & Procedure
Keywords: Attorney-in-fact; Mental capacity
Jurisdiction: Minnesota
Cited Cases: None
Cited Statutes: None
Date: 09/01/2009

Under Minnesota law, an agency relationship is created by contract. Darian v. McGrath, 10 N.W.2d 403, 405 (Minn. 1943). In order to enter into a valid contract, one must have the requisite mental capacity. Macklett v. Temple, 1 N.W.2d 415, 417 (Minn. 1941). And in order for an agency relationship to be created, the putative agent must consent to his appointment. A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285, 290. Thus, arguably, an attorney-in-fact must accept his appointment and have the mental capacity to do so.

There is a presumption of competence. Jasperson v. Jasperson, 27 N.W.2d 788, 792 (Minn. 1947). Although mere mental weakness does not incapacitate an individual from contracting, he must have the mental capacity to understand, to a reasonable extent, what he is doing. See Younggren v. Younggren, 556 N.W.2d 228, 232 (Minn. App. 1996) (person is competent to enter power of attorney relationship if he has enough mental capacity to understand, to a reasonable extent, the nature and effect of what he is doing). Capacity is measured as of the time the party enters into the agreement at issue. Fisher v. Scheffer, 656 N.W.2d 592, 597 (Minn. App. 2003). Whether one lacks the capacity to enter into a power of attorney relationship is a question of fact. Id. at 234.

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