Powers coupled with an interest: Overview, definition, and example
What are powers coupled with an interest?
Powers coupled with an interest refer to a legal concept in which a person or entity is granted a power or authority to act on behalf of another, but this power is tied to an underlying interest in the property or subject matter. Unlike a mere power of attorney, which can be revoked at any time, powers coupled with an interest are generally irrevocable. This means that the person holding the power has a vested interest that is legally tied to their ability to exercise the power, and they cannot be removed or prevented from exercising that power as long as their interest remains.
Why are powers coupled with an interest important?
Powers coupled with an interest are important because they provide legal protection and stability to the holder of the power. This ensures that the holder can act on behalf of another without fear of the power being revoked arbitrarily. Powers coupled with an interest are typically used in situations where the holder of the power has a financial or personal interest in the outcome of the exercise of that power. The irrevocability of such powers ensures that the holder can act without interference and is critical in situations involving trust administration, real estate transactions, and business agreements.
Understanding powers coupled with an interest through an example
For example, a person might grant a power of attorney to another individual, allowing them to manage and sell real estate on their behalf. If the power of attorney is coupled with an interest, such as the agent having a financial stake in the sale of the property, the agent’s authority to sell the property cannot be revoked, as their financial interest is tied to the transaction.
In another example, a business partner might have the power to make decisions regarding the sale of company assets, with the authority coupled with an interest in the profits from the sale. This means that the partner can act on behalf of the company in selling assets, but their ability to exercise this power is linked to their ownership interest in the business.
An example of a powers coupled with an interest clause
Here’s how a powers coupled with an interest clause might appear in a contract:
“The Agent is granted the power to sell the property described in this Agreement. This power is coupled with an interest, as the Agent holds a 10% ownership interest in the property. The power to sell shall remain in effect and cannot be revoked as long as the Agent maintains ownership in the property.”
Conclusion
Powers coupled with an interest are a significant legal tool that ensures the holder of the power can exercise their authority without the risk of revocation, as their interest is tied to the outcome of the action. This concept is widely used in trust law, business agreements, and real estate transactions to create binding and irrevocable powers that protect both the holder’s interest and the integrity of the agreement.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.