The defendant was in possession of the plaintiff’s estates, as agent and manager, at a salary under a power-of-attorney..... But the defendant urged that the giving of the guarantee, gave him an authority coupled with an interest and that therefore, the power-of-attorney was irrevocable. Is the power-of-attorney irrevocable? Decide.

Question: The defendant was in possession of the plaintiff’s estates, as agent and manager, at a salary under a power-of-attorney. In addition to the consideration of his services as agent and manager, which were mentioned in power-of-attorney, the defendant had given further consideration for the granting of power-of-attorney to him in the shape of personal guarantee to a mortgagee of the estates, that he would pay the mortgage debt on the day fixed for redemption.

This further consideration was not mentioned in the power-of-attorney. But the defendant urged that the giving of the guarantee, gave him an authority coupled with an interest and that therefore, the power-of-attorney was irrevocable. Is the power-of-attorney irrevocable? Decide. [Punjab JS 1998]

Find the answer to the mains question of the Law of Contract only on Legal Bites. [The defendant was in possession of the plaintiff’s estates, as agent and manager, at a salary under a power-of-attorney.....  But the defendant urged that the giving of the guarantee, gave him an authority coupled with an interest and that therefore, the power-of-attorney was irrevocable. Is the power-of-attorney irrevocable? Decide.]

Answer

To determine whether the power-of-attorney is irrevocable or not, we need to analyze the concept of "authority coupled with an interest" as per the provisions of the Contract Act.

Under the Contract Act, an agency is revocable by the principal, except when it falls under one of the exceptions mentioned in Section 202 of the Act. One such exception is when the agent's authority is coupled with an interest. According to Section 202 of the Contract Act:

"Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest."

In this case, the defendant had been granted power-of-attorney by the plaintiff to act as an agent and manager of the plaintiff's estates. The power-of-attorney specifically mentioned the consideration for the defendant's services as an agent and manager. However, there was an additional consideration given by the defendant, which was not mentioned in the power-of-attorney. This additional consideration was the defendant's personal guarantee to a mortgagee of the estates, promising to pay the mortgage debt on the redemption date.

The defendant argued that this personal guarantee gave him an authority coupled with an interest, making the power-of-attorney irrevocable. The question before the court is whether this personal guarantee can be considered an "interest" within the meaning of Section 202 of the Contract Act.

The term "interest" in this context typically refers to a proprietary or financial interest in the subject matter of the agency. It must be an interest that gives the agent a legal stake or right in the property itself, not merely a personal promise or undertaking.

In this case, the defendant's personal guarantee to pay the mortgage debt on the redemption date does not create any proprietary interest in the plaintiff's estates. It is merely a personal obligation or promise by the defendant to another party (the mortgagee) and does not give the defendant any legal stake or right in the property.

Therefore, based on the provisions of the Contract Act and the absence of a proprietary interest, the power-of-attorney granted to the defendant is not coupled with an interest and remains revocable by the plaintiff. The plaintiff has the right to revoke the power-of-attorney, subject to any other legal obligations or contracts between the parties.