Fiduciary Duty

What Is Fiduciary Duty? A fiduciary duty is the most stringent standard of care recognized in law. It requires a fiduciary to act solely in the best interest of the beneficiary, putting the beneficiary's interests above their own. This duty arises in relationships where one party places special trust and confidence in another, such as between corporate officers and shareholders, attorneys and clients, or trustees and beneficiaries. ## Core Components - **Duty of loyalty** requires the fiduciary to avoid conflicts of interest and self-dealing - **Duty of care** requires the fiduciary to act with reasonable prudence and diligence - **Duty of good faith** requires honest and fair dealing - **Duty of confidentiality** prohibits misuse of proprietary information ## Breach of Fiduciary Duty Violating a fiduciary duty can result in significant legal consequences, including compensatory damages, disgorgement of profits, punitive damages, and removal from the fiduciary position. Common examples of breach include self-dealing transactions, usurping business opportunities, competing with the beneficiary, and failing to disclose material information.