What Is a Breach Of Fiduciary Duty?

Many people have heard the term “fiduciary”, but most only have a vague idea of what it means. However, fiduciary relationships are more common than many people realize, so it is important to understand exactly what they are.


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What Is A Fiduciary Relationship?

A fiduciary relationship is a relationship where one party places complete confidence and trust in another. A classic example of a fiduciary relationship would be the relationship between an attorney and their client. In this case, the attorney is the fiduciary of their client and is expected to look out for their best interests.

However, such a relationship is only legally enforceable if it has been formally designated as a fiduciary relationship, as per existing statutes and laws. A common example of this would be the fiduciary duties that a business partner has to his or her other partners and the board of members. In this case, the fiduciary is expected to act in the best interests of those other parties.

What Is A Breach Of Fiduciary Duty?

There are a number of different ways that a fiduciary might breach his or her duty. However, whether such a breach of fiduciary duty is legally enforceable comes down to a couple of different factors. First and foremost, it depends on whether a legally recognized fiduciary relationship was in place at the time of the alleged dispute. The courts will also consider the scope of the relationship and whether the duties placed upon the fiduciary are proportional in this context. Finally, courts will have to decide whether any of the duties that could be reasonably expected of the fiduciary have been breached.

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There are innumerable forms that such a breach could take. Any action that is deemed to be contrary to the interests of the client could be used to pursue a claim against the fiduciary.

Making A Claim For A Breach

If a client believes that their fiduciary has breached the contract of trust that exists between them, they can pursue a claim for damages. In order for any such claim to be successful, it needs to successfully demonstrate three elements: duty, breach, and damages.

Duty: The plaintiff in a breach of fiduciary duty case needs to be able to demonstrate that the defendant had a fiduciary duty towards them. There are too many forms that a fiduciary relationship can take to list them all here, but any relationship where the client has an expectation of the other party putting their interests first could potentially be a fiduciary relationship.

Breach: As well as demonstrating that the defendant had a fiduciary duty over them, plaintiffs will also need to be able to point to an exact incident that constitutes a breach of the fiduciary relationship.

Damages: As well as showing that a breach has occurred, plaintiffs also need to demonstrate that they have suffered some kind of damage as a result.

A fiduciary relationship is a serious thing. In any fiduciary relationship, a client expects their fiduciary to act in their interests. When this doesn’t happen, the results can be severe. If you suspect that you have been the victim of a breach of fiduciary duty, it is vital that you consult with an attorney straight away.