Legal Memorandum: Validity of a Statutory Power of Attorney

Issue: Under Minnesota law, is a statutory power of attorney invalid where the principal did not fully read or properly understand the terms of the document?

Area of Law: Business Organizations & Contracts
Keywords: Power of attorney; Mental capacity; Mistake
Jurisdiction: Minnesota
Cited Cases: None
Cited Statutes: None
Date: 09/01/2009

Factors such as (1) a principal not thoroughly reading the Short Form (or, presumably, the statutes that define the terms used therein); (2) counsel not adequately explaining the document; (3) the relatively youth, inexperience and lack of sophistication in business matters; or (4) the mistaken belief that a power of attorney is limited to “real estate” matters, are unlikely to be enough to allow a principal to avoid a POA.

In Minnesota the general rule is that “[i]n the absence of fraud or misrepresentation, a person who signs a contract may not avoid it on the ground that he did not read it or thought its terms to be different.” Gartner v. Eikill, 319 N.W.2d 397, 398 (Minn. 1982). Moreover, youth and inexperience do not change the result. For example, “mental weakness” does not excuse a party from his contractual obligations. Timm v. Schneider, 279 N.W. 154, 755 (Minn. 1938). Even illiteracy is not a defense. Greer v. Kooiker, 253 N.W.2d 135, 140 (Minn. 1977).

All that is required to bind oneself is that the party have the “mental capacity” to understand the nature and effect of his signature, to a reasonable extent; there is no requirement that he actually understand the document in any detail. Younggren v. Younggren, 556 N.W.2d 228, 232 (Minn. App. 1996) (person is competent to sign power of attorney if he has enough mental capacity to understand, to a reasonable extent, the nature and effect of his signature).