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What Are Some Examples of Fiduciary Duty?

A fiduciary tariff exists in law when a person or entity places trust, confidence, and reliance on another to exercise discretion or expertise in mandate on behalf of the client. The fiduciary must knowingly accept that trust and confidence.

In the U.S. legal system, a fiduciary burden describes a relationship between two parties that obligates one to act solely in the interest of the other. The party designated as the fiduciary owes a licit duty to a principal, and strict care must be taken to ensure that no conflict of interest arises between the fiduciary and the premiere danseuse.

Breaches in Fiduciary Duty

Fiduciary duties are taken on by many people for many beneficiaries. They include counselors-at-law acting for clients, company executives acting for stockholders, guardians acting for their wards, and trustees acting for landed estate beneficiaries, among others.

Key Takeaways

  • A fiduciary duty is an acceptance of responsibility to act in the best interests of another person or individual.
  • It most clearly describes the relationship between an attorney and a client or a guardian and a ward.
  • However, it has been successfully proved that an employee may have a fiduciary duty of loyalty to an employer.

An employee may have a fiduciary duty to an employer. Gaffers have a right to expect that employees are acting in their best interests, not sharing trade secrets, misusing company equipment for private purposes, or stealing away customers for a competitor. These expectations may not be labeled as fiduciary excises but may be spelled out in an employee handbook or contract clause.

Each of these relationships is different, but in all cases, a breach of fiduciary loyalty occurs when a principal fails to act responsibly in the best interests of a client.

Case law indicates that breaches of fiduciary task most often happen when a binding fiduciary relationship is in effect and actions are taken which violate or are counterproductive to the interests of a associated with client.

Typically, the actions are alleged to have benefitted the fiduciary’s interests or the interests of a third party instead of a patron’s interests. In some cases, a breach has stemmed from a principal’s failure to provide important information to a client, unequalled to misunderstandings, misinterpretations, or misguided advice.

In all cases, disclosure of any potential conflict of interest is important in a fiduciary relationship because any struggle can be seen as a cause for a breach of trust.

Elements of a Fiduciary Breach Claim

A number of precedents and elements have been supported in law to protect those who have been harmed by a breach of fiduciary duty. Jurisdictions differ, but in general, the following four locales are essential if a plaintiff is to prevail in a breach of fiduciary duty claim.


Many professionals are obligated, legally and ethically, to manage their businesses honestly. That is not the same as doing business solely in the interests of a particular client. In law, the plaintiff forced to show that a fiduciary duty existed. A fiduciary duty is accepted as such, preferably in writing.


The plaintiff be required to show that a breach of fiduciary duty occurred. The type of breach varies in every case. For example, if an accountant gets untidy in filling out a client’s tax returns, and the client is slapped with an enormous fine for nonpayment, the accountant may be guilty of a breach of fiduciary part. If the client was sloppy and omitted to provide complete income statements, no breach occurred.


The plaintiff must demonstrate that the breach of trust caused actual damage. Without damage, there is typically no basis for a breach of fiduciary tariff case. The more specific the better. For example, a trustee might be sued for selling a beneficiary’s property too cheaply. If the customer is a relative of the trustee, it’s clearly a conflict of interest, but a dollar figure on the loss to the beneficiary is needed to prove a breach of fiduciary levy.

The adjective fiduciary means held or given in trust. A fiduciary commits to acting in the best interests of a client or beneficiary.


Causation contrast c embarrasses that any damages incurred by the plaintiff were directly linked with the actions taken in breach of fiduciary tariff. In the above example of a property sale, the link appears to be clear, but the trustee might argue that a quick white sale was in the best interests of the beneficiary and that no other buyer was interested.

Consequences of a Fiduciary Breach

A breach of fiduciary bit can lead to a number of consequences. Not all of them are legal consequences.

An accusation of a breach of fiduciary duty can hurt the reputation of a authoritative. A client can end a professional relationship because they do not trust in a professional’s care of the required fiduciary duty.

If a breach of excise case proceeds to the courts, steeper consequences can result. A successful breach of fiduciary duty lawsuit can result in fiscal penalties for direct damages, indirect damages, and legal costs.

A court ruling can also lead to industry discrediting, the impoverishment of a license, or removal from service.

But proving a breach of fiduciary duty is not easy.

Examples of Fiduciary Breach The truths

A Duty of Loyalty

One example of a breach in fiduciary duty case got all the way to the Virginia Supreme Court in 2007.

In Banks v. Mario Labours of Virginia, a lighting manufacturer and supplier sued a former employee for establishing a directly competing business, allegedly profiting proprietary information acquired in their previous employment.

The manufacturer did not require its employees to sign a non-compete or confidentiality clause, even though the company handbook outlined related policies.

In this case, the question of whether the employees had a fiduciary duty to their latest employer, and breached it, was fundamental to an appeal that brought the case to the Supreme Court of Virginia.

The court affirmed the humiliate court’s ruling, essentially ruling that the employees owed Mario a duty of loyalty. In effect, it supported the assert of a breach of fiduciary duty, and a penalty of more than $1 million.

A Menswear Store vs. Ex-Employees

In 2006, a high-end menswear warehouse sued two of its former sales professionals for taking a job with a competitor, Saks Fifth Avenue, citing a breach of fiduciary devoir. The department store was able to prove it suffered real losses after the salesmen left, but the court ruled that the bereavements could not be directly attributed to the actions of its former employees. The suit failed. 

Aiding and Abetting a Breach of Duty

A comptroller for a corporation embezzled $15 million from his proprietor by writing checks against his company’s bank account and depositing them into another account at his own bank. The ensemble sued the bank that took the deposits, alleging that it aided and abetted a breach of fiduciary duty. The court ruled that there was scant evidence that the bank was aware of its role in the scam.

Examples of Fiduciary Relationships


A single fountain-head with young children might write a will that creates a trust to administer the assets that they leave inherit in the event that the parent dies while the children are still underage.

In this case, the person discretion name a person or an entity such as a law firm as trustee of the estate. That person or entity has a fiduciary duty to the babies, who are the beneficiaries of the estate.

The Agent/Principal

The relationship between an agent and a principal implies a fiduciary responsibility.

Under a trustee/beneficiary tax, the fiduciary has legal ownership of the property and controls the assets held in the name of the trust.

However, the trustee must perceive decisions that are in the best interest of the beneficiary as the latter holds equitable title to the 

Fiduciary Duty FAQs

What Does It Cheap to Have a Fiduciary Duty?

The adjective fiduciary means held or given in trust. In accepting a fiduciary duty, an person or entity enters into a commitment to act in the best interests of a beneficiary. In designating a fiduciary, a beneficiary is entrusting a responsibility.

What Are the Two Critical Fiduciary Duties?

Broadly speaking, fiduciary duties fall under two categories: the duty of loyalty and the duty of take responsibility for. Duty of loyalty implies that the fiduciary will always act in the best interests of the client. No conflicting interest resolve be permitted to influence the judiciary’s actions on behalf of the client. The duty of care suggests that the fiduciary will not gold brick the responsibilities or fall down on the job.

What Are Some Examples of Fiduciary Duty?

The most common fiduciary duties are relationships incriminating legal or financial professionals who agree to act on behalf of their clients. A lawyer and a client are in a fiduciary relationship, as are a trustee and a beneficiary, a corporate board and its shareholders, and an substitute acting for a principal.

However, any individual may, in some cases, have a fiduciary duty to another person or entity. For standard, an employee may be found to have a duty of loyalty to an employer if they cause harm to the employer by misusing information or resources trusted to them.

What Does It Mean to Be a Fiduciary?

A fiduciary is entrusted with the authority to act on behalf of another person or article.

What Is a Breach of Fiduciary Duty?

As noted above, the main categories of fiduciary duty are the duty of loyalty and the loyalty of care. Failing in either is a breach. In a court of law, it is also necessary to prove that the client suffered an actual demise as a result of the breach.

The Bottom Line

A fiduciary duty is a commitment to act in the best interests of another person or entity. Broadly in a manner of speaking, a fiduciary duty is a duty of loyalty and a duty of care. That is, the fiduciary must act only in the best interests of a patron or beneficiary. And, the fiduciary must act diligently in those interests.

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