Question

A bank accepts a power of attorney and relies on its validity when releasing funds to the attorney however the power of attorney has been revoked. Who has liability for the $5000 taken?

Answer 1

In the context of law, liability for funds taken under a revoked power of attorney could fall on the bank if it failed to verify the power of attorney's validity, but if the revocation was not properly communicated, the attorney might be liable.

Step-by-step explanation:

The subject of this question involves the area of law, specifically dealing with the liability issues surrounding the use of a revoked power of attorney by a bank. When a bank acts on a power of attorney that has been revoked, liability for the released funds can potentially rest with the bank if it can be shown that the bank did not exercise due diligence in confirming the validity of the power of attorney. Crucial to determining liability is whether the bank was aware or should have been aware that the power of attorney had been revoked. If the revocation was not communicated to it in a method prescribed by law, and it acted in good faith, the attorney who withdrew the funds might be held liable for their return.