Ads about investing or banking will often use the term fiduciary duty, but the average person may not know what it means. Someone’s fiduciary duty is a wide-ranging obligation where a business and its staff are obligated to support the best interests of a client and/or the company. Those who breach that duty (whether it is a sales associate, CEO or representative) may find themselves defending their actions in court.
A relationship built on trust
Trust is the cornerstone of a fiduciary relationship, but it is also formalized in agreements that detail the duties and costs of services. Typical examples include:
- Duty of loyalty: This involves loyally acting in the client’s best interest, such as making smart investments and avoiding actions against the client’s best interests. There should be no conflict of interest.
- Duty of care: Plaintiffs may cite this as lacking when individuals do not do their job or fulfill their fiduciary responsibilities.
It could involve not sharing information with a client that is crucial to their success or not putting the client’s interests above their own.
Was there a breach?
These questions can help identify whether the individual or company violated their responsibility:
- Was there an agreement in place at the time of the dispute?
- Does the dispute fall within the parameters of the contract?
- Was there a breach of their duties?
Four elements of a claim
The following steps are all a necessary part of a breach of fiduciary duty claim:
- Duty: Showing that the defendant had an obligation is the first step.
- Breach: This typically involves facts about the breach.
- Damages: Once the above is established, the plaintiff must show proof of damages.
- Causation: The plaintiff shows that the defendant’s actions caused the damages.
Proof is key to resolving the dispute
Each dispute is different, but the plaintiff must prove that the defendant breached their fiduciary duty. An attorney who understands contracts and agreements can be valuable by forcefully arguing on behalf of their client that there was (or was not) damages.
