Authorization Contract – Essential Contents

Authorization is a common activity in civil and commercial transactions as well as in litigation and administrative procedures. Through an authorization contract, individuals and organizations may authorize a third party to act on their behalf in performing certain tasks, thereby ensuring that rights and obligations are fully carried out without interruption. However, in practice, not all parties clearly understand the fundamental contents of an authorization contract or the potential legal risks that may arise during its implementation. Therefore, drafting a comprehensive and well-structured authorization contract is an important factor in protecting the lawful rights and interests of the parties.

In this article, TNTP’s lawyers will analyze the concept of an authorization contract, its essential and important contents, and common legal risks, thereby helping individuals and organizations minimize potential disputes.

1.What is an authorization contract?

According to Article 562 of the 2015 Civil Code, an authorization contract is an agreement between the parties, under which the authorized party is obliged to perform one or more acts on behalf of the principal.

In other words, through an authorization contract, the authorized party acts on behalf of the principal to establish and perform legal acts within the scope agreed upon by the parties. The agreement is established on the basis of voluntariness and trust, and is commonly used when the principal cannot directly perform or does not have the conditions to carry out necessary acts.

2.Essential contents in an authorization contract

To ensure legal validity, practical applicability, and to minimize disputes, an authorization contract should include the following basic contents:

2.1.Information of the Parties

Accurate and complete information of the parties is essential to identify the contracting parties and avoid risks of rejection by authorities or third parties. The contract should at least include:

• Full name;
• ID/Citizen ID/Passport number (for individuals) or Tax Code/Enterprise Code (for organizations);
• Residential or head office address;
• Contact phone number;
• Legal representative and position (for organizations).

Incomplete or inaccurate information may lead to disputes or rejection of the contract in practice.

2.2.Scope of Authorization

The scope of authorization specifies the acts, rights, and obligations assigned to the authorized party. The authorized party may only act within the agreed scope. The contract should clarify:

• Acts permitted;
• Extent of authority (full authority or partial authority);
• Transactions permitted and transactions prohibited.

The clearer and more detailed the scope, the lower the risk of abuse of authority.

2.3.Duration of Authorization

The duration defines the period during which the authorized party may act on behalf of the principal. It may be:

• Specific start and end dates;
• Linked to completion of a specific task or transaction;
• As prescribed by law for certain types of work.

Clear duration helps avoid disputes over termination of representation.

2.4.Rights and Obligations of the Parties

An authorization contract should specify rights and obligations to ensure proper performance and minimize disputes, including:

• Rights of the authorized party to act within the agreed scope;
• Obligation to report and provide information to the principal;
• Obligation to safeguard and properly use documents and materials provided.

2.5.Remuneration (if any)

The contract may be with or without remuneration, depending on the parties’ arrangement:

• If with remuneration: specify amount, method, and timing of payment.
• If without remuneration: record clearly to avoid disputes over costs.

2.6.Commitments, Warranties, and Liability for Breach

This section binds the parties legally. It should clarify:

• Liability of the authorized party when acting out of the scope of authorization;
• Liability for damages caused to the principal;
• Grounds for termination, including breach or non-performance.

2.7.Notarization/Certification (if required by law)

For certain transactions, the law requires notarization or certification for validity, such as authorization related to housing, land use rights, vehicle registration, or assets requiring registration. Compliance ensures enforceability and avoids invalidity.

3.Common legal risks in an authorization contract

Due to their trust-based nature, an authorization contract may involve risks such as:

• Exceeding the scope of authorization, leading to invalid transactions or damages;
• Authorizing persons lacking legal capacity or authority;
• Unauthorized re-delegation, increasing risks of abuse and asset loss;
• Absence of reporting obligations, leaving the principal unable to monitor performance;
• Failure to notarize/certify when required, rendering the contract invalid.

An authorization contract is an important legal instrument widely used in various fields. Drafting a clear, comprehensive, and legally compliant agreement helps minimize risks and protect lawful rights and interests. For transactions of high value, complexity, or requiring specific legal formalities, individuals and organizations should consult lawyers for advice and support in drafting appropriate agreements, thereby avoiding unnecessary disputes.

This article, “Authorization Contract – Essential Contents”, was prepared by TNTP’s lawyers. We hope it will be useful for individuals and organizations in matters related to authorization.