Question 7
Domain 1: Customs Entry and Importation ProcessJohn and Fred Smith each had a 25% ownership share of a general partnership, JJF, with their father, Jack Smith, owning the other 50%. Three weeks ago, JJF had sent ABC Customhouse Brokers (ABC) a copy of the bill of lading, a commercial invoice, and a packing list for their incoming shipment. JJF, a longtime client of ABC, had executed a new customs power of attorney (POA) signed by Jack Smith one month ago. However, John Smith advised ABC that his father, Jack Smith, died last week, with JJF changing by operation of law into Smith & Smith, a new partnership that inherited JJF’s legal rights and responsibilities. ABC states that they cannot proceed with the customs clearance on Smith & Smith’s behalf without a newly executed POA. Which regulation explains why the existing POA is no longer valid?
Correct answer: B
Explanation
19 CFR 141.39(b) provides that a customs power of attorney is terminated when the principal changes by operation of law, including a partnership reorganization or dissolution. Because Jack Smith’s death caused JJF to become Smith & Smith, the prior POA signed for JJF no longer authorizes ABC to act for the new partnership, so a new POA is required.
Why each option is right or wrong
A. 19 CFR 141.34
19 CFR 141.34 concerns entry documentation matters, not termination of POA after entity change.
B. 19 CFR 141.39(b)
19 CFR 141.39(b) states that a customs power of attorney terminates when the principal changes by operation of law, including a partnership dissolution or reorganization. Here, Jack Smith’s death caused JJF to cease as the original principal and continue as a different partnership entity, Smith & Smith, so the POA executed one month earlier for JJF no longer authorizes ABC to act for the successor entity.
C. 19 CFR 111.23(b)
19 CFR 111.23(b) addresses customs broker licensing or permit concepts, not POA validity after partnership change.
D. 19 CFR 111.30(b)
19 CFR 111.30(b) relates to broker responsibilities involving powers of attorney, not the legal termination rule itself.