As a previous post highlighted, businesses in Louisiana and elsewhere have to be conscious of the relationships they establish. Whether it is in the normal course of business or for business development, these relationships come with benefits, duties and obligations. The failure to uphold the terms of these specific relationships, such as one that is created with a fiduciary, could mean a breach. Even more so, this could mean a complex business dispute regarding the damages incurred from this breach of fiduciary duty.
In order to understand when such a breach occurs, it is important to be aware of when and how this relationship is formed. This not only establishes fiduciary responsibilities but also helps identify when a breach occurs.
Fiduciary, which means faith, trust, reliance and confidence, in a business relationship means that one party is vested with the right or the power to act for the benefit of another person or entity. Such a relationship is based on trust and confidence and specific laws have been passed to prevent fiduciaries from acting in ways that would be deemed harmful or abusive to this relationship.
Under the Department of Labor’s fiduciary rule, if an entity that qualifies as a fiduciary fails to fulfill their enumerated duties, that entity can be held liable to the aggrieved party. In other terms, the harmed party could seek damages for breach of fiduciary duty through business litigation.
This and other business law issues can become complex, often making it difficult for businesses and individuals to initiate such an action. Therefore, it is in the best interest of the company or the individual to understand their rights and the legal recourse available to them in the matter.
Source: Investopedia.com, “Identifying a Breach of Fiduciary Duty,” John Burke, Aug. 24, 2016