What is a breach of fiduciary duty?


For those owning a business in Louisiana or elsewhere, it is likely that a variety of professional relationships are formed in the normal course of business. No matter the size of a company, a fiduciary relationship is established at any point when a party places confidence and trust in another party with that party having full knowledge of this.

When a fiduciary relationship is formed, this is called a fiduciary duty; when a fiduciary duty is established, this means that the duties of the fiduciary can be enforced if the relationship is formed under the law. Additionally, if a fiduciary breaches the duties they owe to another party, this could be cause for litigation.

What is a breach of fiduciary duty? Such a breach occurs when one party has an obligation to act in the best interests of another party but the party owing the duty acts contrary to that duty. Common examples of this relationship are an attorney-client relationship, principal-agent relationship and trustee-beneficiary relationship.

When examining whether or not a fiduciary duty has been breached, three factors should be considered. First, one must consider whether or not a fiduciary relationship existed at the time of the dispute. Second, one should consider the scope and duties of the fiduciary relationship. Lastly, one should assess whether any of these established duties were, in fact, breached, and, if they were breached, were they within the scope of the relationship.

In order to initiate business litigation for a breach of fiduciary duty, there must have been an established duty, a breach of that duty and damages suffered as a result of this breach. Such a situation could be complex and difficult to navigate, and those dealing with this or any other business law issue should understand their rights and the options available to resolve their issue.

Source: FindLaw, "Breach of Fiduciary Duty," accessed Nov. 20, 2016

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