Skip to main content

A fiduciary duty is the highest standard of care in law, where one party is obligated to act in the best interest of another party. This duty typically arises in relationships where trust and confidence are placed in the fiduciary, such as between a lawyer and client, or a trustee and beneficiary.


 

Legal Context

Fiduciary duty involves loyalty and care, requiring the fiduciary to prioritize the interests of the other party above their own. Breaching this duty can result in legal action, including claims for damages or rescission of agreements. Fiduciaries must avoid conflicts of interest and are expected to act with integrity and good faith in their dealings.


 

Example

In corporate law, a company’s board of directors has a fiduciary duty to the shareholders. If the directors engage in self-dealing or make decisions that benefit themselves at the expense of the shareholders, they may be sued for breaching their fiduciary duty. This could lead to personal liability for any losses incurred by the shareholders due to their actions.