A power of attorney form is a document that authorizes someone else to perform legal acts on your behalf. You may authorize an agent, for example, to purchase a vehicle in your name. If you do, you will be legally bound to the purchase as soon as the agent signs the purchase contract in your name.
Principal and Agent
Powers of attorney are governed by agency law. An agent is simply someone you authorize to perform acts that otherwise only you would have the right to perform. He does not have to be an attorney. Your authorization must be in writing, but you may revoke it at any time as long as you are mentally competent and able to communicate. Your agent may sign a purchase contract on your behalf by either signing your name or signing "(agent's name) on behalf of (your name)."
Some states offer standardized power of attorney forms, but most don't require you to use them -- you can draw up your own form as long as you include all of the required elements. State laws differ somewhat, but at the minimum the document must include the name of your agent, a statement granting the agent authority and your signature. It is also advisable to have the agent sign the document, have both signatures witnessed by two people and have the witnesses sign the document.
Draft your instructions carefully, drawing a balance between being too general and being too specific. If your statement is too general -- "perform all acts necessary to purchase a car for me," for example -- your agent might be vested with more authority than you intended, such as the authority to purchase a type of car you don't want. If your statement is too specific, your agent might lack the authority to complete the transaction. For example, if you grant your agent only the authority to sign a purchase contract, he will be unable to transfer title to the car into your name.
The Doctrine of Apparent Authority
The danger of a written power of attorney is that your agent can bind you as long as another party with whom he is dealing has reason to believe the agent has legitimate authority, even if he doesn't. For example, if you sign a power of attorney form, deliver it to your agent and later dismiss her without demanding return of the power of attorney form, she can present the form to a car salesman, sign a purchase contract and legally bind you to pay for the car. For this reason, it is best to include an expiration date on your power of attorney form.