Fiduciary duties are as wide-ranging as job descriptions, but those with a fiduciary duty often work in the financial or business sectors. The term defines expectations of trust and reliance on other entities who act on behalf of their clients or partners. The duty must be acknowledged and accepted; often, this is done formally in a contract.
A breach violates that duty
A breach of fiduciary duty may occur when one party violates the agreement. Whether it is a financial advisor accused of giving bad advice, board members putting their best interests above the company’s, or a business advisor failing to share important information that would benefit the client who hired them, the accused will need to defend their actions in court. Typical issues addressed in a dispute include:
- Was the alleged breach within the scope of the defendant’s fiduciary duty?
- Was the duty established before the alleged breach?
- Were the duties actually breached?
Establishing proof
The plaintiff will need proof to win their case. Doing this includes:
- Establishing a duty or obligation
- Proving the breach of duty or obligation
- Proving the breach caused damages
- Determining direct or indirect compensatory damages
If the parties’ contract so provides, the legal fees for both sides are paid by the party who loses the dispute.
The burden of proof must be clear
It is clearly in the plaintiff’s and defendant’s best interests to win the dispute. Those who lose can pay damages, but damage to their reputation can be hard to repair even after time passes. So it is always wise to take these claims seriously.