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What Is A Breach Of A Fiduciary Duty?


In law, there is no overriding duty to act on someone else’s behalf, or to their benefit. That duty only arises if there is a special relationship between two people. When there is such a relationship, the parties are considered to be fiduciaries to each other, and breaching your fiduciary duty to someone else, can lead to serious legal problems.

When a Fiduciary Duty Arises

Absent any special relationship between two parties, someone only has a legal obligation to act for the good of another, if there is a written contract obliging them to do so, or a law that creates this duty. For example, doctors, lawyers and other professionals, all must act in the best interests of their clients.

But often, there is no explicit contract or law, but there is still a duty for someone to act for the benefit of another. For example, an officer or board member of a company is considered to be a fiduciary of the company, as are partners and joint venturers fiduciaries to each other.

Your real estate agent, financial planner, architect, or financial advisor may also owe you a fiduciary duty.

How do you know when a fiduciary duty exists?

-One party must have more expertise in an area than the other

-The other party relies upon that party’s expertise or knowledge, and trusts the other person for advice or information

-The “expert” knows he or she is being relied upon, and accepts the fact that he or she is in a superior position, and that he or she is being relied upon

When Is There a Breach?

If there is a fiduciary relationship, and it is breached, the harmed party—the party that isn’t the “expert”-can sue for damages.

However, a breach of a fiduciary duty has to be more than a mere mistake or an error. Not every piece of financial advice ends up being good advice, the work that a partner in a business does may sometimes be poor; and the services rendered by some professional may not always be up to par, or end up with the result you wanted

To show a breach of fiduciary duty, you have to show that the other person did not act with good judgment, in a reasonable way, or otherwise, that the other party acted in their own best interests, and not yours.

For example, if a CEO decided her company should start expanding its business, and that expansion ends up being a financial bust, so long as the decision to expand was made in good faith, there is no breach of fiduciary duty by the CEO.

But if the CEO decided the company should expand its business in a way that profited that CEO personally, and it ends up as a financial bust, the CEO may be liable for breach of fiduciary duty.

Call our Fort Lauderdale business lawyers at Sweeney Law P.A. at 954 440-3993 for help if you have a business litigation lawsuit.




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