What is a fiduciary duty?
A concept of a fiduciary duty was originally a flexible equitable concept that arose to provide relief when no legal remedy was available. The core duty of a fiduciary is the duty of loyalty. This requires the fiduciary to put the interests of the beneficiary first and not to manipulate the relationship for the fiduciary’s personal benefit. This prevents the fiduciary from self-dealing, creating conflicts of interest, and withholding disclosure of material facts.
One of the more famous quote that describes a fiduciary duty comes from former Judge Cardozo during the tenure on the New York Court of Appeals, where he described the duty as “Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.”
A fiduciary also owes a duty of care to execute his or her duties in an informed manner and to act as an ordinary prudent person. If the fiduciary has special skills, he or she is under a duty to use those skills.
A fiduciary duty may be created by contract when the parties agree to a fiduciary relationship. This includes the attorney-client or agent-principal relationship. Florida statutes also expressly impose a fiduciary in several contexts including: broker-client, trustee-beneficiary, guardian-ward, director-corporation, among others.
In sum, a fiduciary duty is often created based upon the nature of the parties’ relationship and may create a cause of action for breach when the fiduciary does not strictly adhere to acting in the best interest of the dependent party.Please Note: McCabe Rabin, P.A. provides these FAQ’s for informational purposes only, and you should not interpret this information as legal advice. If you want advice as to how the law might apply to the specific facts and circumstances of your case, please click here to contact one of our attorneys.