The trusted person - the fiduciary – is expected to act in good faith, in the best interests of their principal, rather than in their own personal interests. Human frailties being what they are create the temptation for trusted people to be swayed by their own personal interests.Įspecially when they can't be supervised all of the time, and the opportunity presents itself. It's the loyalty required of the person that makes a person a fiduciary.Īnd that gives rise to the fiduciary duties to the principal. It’s these situations, the person is expected to conduct themselves with a high level of loyalty – a single-minded loyalty – to the principal. The person is expected to look out for the interests of the principal, to be on the principal's side and look out and look after the principal's best interests, rather than their own. In law, people taking on a position which involves a high level of trust attracts a degree of loyalty in response to that placement of trust. Taking on a position with a high level of trust brings with it the ability for the person to abuse that trust: the person’s behaviour influences or controls the interests of the principal. That person can be trusted to influence, manage or control the affairs of the principal, be it an individual or a business. The trust and confidence between people dealing with one another can be of different levels and kinds. Fiduciary Duty MeaningĪ person or a business can be placed placed a position of trust for a principal. So too with managers of a company, or any other person working with or for a company. Provided the relationship between a director and a shareholder satisfies the relevant legal test, a fiduciary duties can be liable to shareholders too. any associated loss sustained by the principal.ĭirectors owe their duties to the company, primarily.any profit made or benefit received by the fiduciary, and.They become personally liable to the principal for: When those duties are not complied with, it constitutes a breach of fiduciary duty. a duty on the part of the fiduciary not to unlawfully profit from their privileged position as a fiduciary.a duty to avoid conflicts of interest with the principal.a duty to act in good faith to the principal.The duties imported into any fiduciary relationship are: A fiduciary owes fiduciary duties to their principal.
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