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Understanding Civil Causes of Action - Breach of Fiduciary Duty
Definition & Meaning
A breach of fiduciary duty occurs when a person or entity in a fiduciary relationship fails to act in the best interest of another party. This relationship is characterized by trust, confidence, and reliance. For example, a board member of a corporation has a fiduciary duty to act in the best interests of the shareholders, while an attorney must prioritize their client's interests. When someone accepts a fiduciary role, they are legally obligated to avoid actions that could harm the client or benefit themselves at the client's expense.
Table of content
Legal Use & context
This term is primarily used in civil law, particularly in cases involving trusts, corporations, and professional relationships. Breaches of fiduciary duty often arise in disputes between parties, such as between shareholders and board members or between clients and attorneys. Users may find legal forms related to fiduciary duties useful when drafting agreements or initiating legal actions against a fiduciary who has acted improperly.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
1. An attorney who represents a client in a real estate transaction sells the property to themselves without disclosing this conflict of interest. This action constitutes a breach of fiduciary duty.
2. A trustee who mismanages trust funds for personal gain, rather than for the benefit of the beneficiaries, is also committing a breach of fiduciary duty (hypothetical example).
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Strict penalties for breaches in fiduciary duties related to real estate transactions.
New York
Higher standards for disclosure in attorney-client relationships.
Texas
Allows for punitive damages in cases of egregious breaches.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Breach of contract
Failure to fulfill the terms of a contract.
Focuses on contractual obligations rather than fiduciary duties.
Negligence
Failure to exercise reasonable care, resulting in harm.
Involves a lack of care rather than a violation of trust.
Conflict of interest
A situation where a person's personal interests could influence their professional actions.
Can lead to a breach of fiduciary duty but is a broader concept.
Common misunderstandings
What to do if this term applies to you
If you believe you are a victim of a breach of fiduciary duty, consider the following steps:
Document any evidence of the breach, including communications and actions taken by the fiduciary.
Consult with a legal professional to understand your rights and options.
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