California Real Estate Practice Exam

If one person has the authority to act on matters for another, including the right to bind on contractual matters, that person is known as the:

1. attorney-in-fact

2. beneficiary

3. power of attorney

4. trustee

The correct answer is: attorney-in-fact

In this scenario, the term that accurately describes a person who has the authority to act on behalf of another, especially in regards to binding contracts, is "attorney-in-fact." This individual is often granted this authority through a legal document known as a power of attorney, which specifies the extent of their powers. An attorney-in-fact can make decisions, enter into agreements, and handle various transactions for the principal who has given them this authority. The other terms provide important functions but do not fit this definition as closely. A beneficiary is a person or entity that receives benefits or assets from a trust, will, or insurance policy, rather than acting on behalf of another. The term "power of attorney" actually refers to the legal document that delegates authority, not the person who holds that authority. Lastly, a trustee is an individual or organization that holds and manages assets or property for the benefit of another party, primarily in the context of trusts, and does not have the same binding authority as an attorney-in-fact in contractual matters.