Power Coupled With an Interest Law and Legal Definition

Power coupled with an interest means a power to do some act, delivered along with an interest in the subject matter of the power. A naked power exists when authority is given to a stranger to dispose of an interest, in which s/he had not before, nor has, by the instrument creating the power, any estate. But when power is given to a person, who derives under the instrument creating the power, or otherwise, a present or future interest in the subject over whom the power is to be exercised, it is then a power coupled with an interest. Hence, in order to constitute a power coupled with an interest, the person clothed with it, must derive, under the instrument creating it, or otherwise, a present or future interest in the subject itself, on which the power is to be exercised, and not merely in that which is produced by the exercise of the power. Power coupled with an interest is not held for the benefit of the principal, nor it is irrevocable due to the agent’s interest in the subject matter. For this reason some authorities declare that it is not a true agency power. It is also called as power given as security or proprietary power.

The requirements for the creation of a power coupled with an interest are:

that the agency be held for the benefit of the agent not the principal;

that the agency is created to secure the performance of a duty to the agent or to protect a title in the agent; and

that the agency is created at the same time that the duty or title is created or is created for consideration.

In Pacific Landmark Hotel, Ltd. v. Marriott Hotels, Inc., 19 Cal. App. 4th 615 (Cal. Ct. App. 1993), the court observed that “a power coupled with an interest, is a power which accompanies, or is connected with, an interest. The power and the interest are united in the same person. For an agency to be coupled with an interest the agent must have a specific, present, and coexisting beneficial interest in the subject matter of the agency. The agency must be created for the benefit of the agent in order to protect some title or right in the subject of the agency or secure some performance to him. Monetary compensation, in whatever form it may take, does not create a power coupled with an interest so as to make the agency irrevocable.