Someone’s fiduciary duty is as wide-ranging as their job description. Nevertheless, violating that duty can lead to severe consequences. Generally, it involves a legal or financial situation where an individual or business has a professional obligation to support the interests of their employer, customer or business partner. Those who violate that bond (whether a CEO or board member, salesperson or representative or another associate) breach their fiduciary duty. A breach may lead to defending their actions in civil court.
Defining fiduciary relationships
Trust and confidence are the basis of a fiduciary relationship. These are formalized in contracts that outline the duties and costs. Common examples include:
- Duty of loyalty: The duty involves loyally acting in the client’s best interests. There are no conflicting interests that influence actions on the client’s behalf.
- Duty of care: This implies they shirk their responsibilities or do not do their job.
It could involve not disclosing information crucial to the success of a business or not putting the business’s interests over theirs.
Did they violate that responsibility?
These are some questions that can help identify the breach:
- Was there an agreement at the time in dispute?
- Is the dispute covered within the boundaries of the contract?
- Were the duties breached?
Import elements of a claim
The following help define the breach and responsibility:
- Duty: There was an obligation to the plaintiff.
- Breach: The defendant violated that duty.
- Damages: The plaintiff proves that the defendant’s breach caused financial harm.
Each dispute is different, but generally, the plaintiff must prove that the defendant violated their fiduciary duty. So, it is essential to work with an attorney who understands the nature of these agreements and who can argue forcefully on behalf of their client to prove there are damages.