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Fidelity in legal terms refers to the loyalty and faithfulness that one party owes to another, especially in relationships like marriage or business partnerships. It means being trustworthy and keeping promises.
- What Is A Fiduciary Duty?
- Examples of Fiduciary Relationships
- Types of Fiduciary Duties
- Breaches in Fiduciary Duty
- Consequences of A Fiduciary Breach
- Elements of A Fiduciary Breach Claim
- Examples of Fiduciary Breach Cases
- The Bottom Line
A fiduciary accepts legal responsibility for duties of care, loyalty, good faith, confidentiality, and more when serving the best interests of a beneficiary. Fiduciary duty refers to the relationship between the fiduciary and the principal or beneficiary on whose behalf the fiduciary acts. Strict care must be taken to ensure that no conflict of int...
Trustee/Beneficiary
A single parent with young children might create a living trustto administer the assets that the children would inherit should the parent die while the children are still underage. The parent will name a person or an entity, such as a law firm or bank, as trustee to manage the trust. That person or entity has a fiduciary duty to the children who are the beneficiaries of the estate. The fiduciary/trustee has legal ownership of the property and controls the assets held in the trust in a trustee...
Guardian/Ward
An adult is designated as the legal guardian of a minor child in a guardian/ward relationship. As the fiduciary, the guardian is tasked with ensuring that all matters related to the daily welfare of the child are dealt with responsibly and in the best interests of the child. This care can include deciding where the child will attend school, arranging for health care, and providing an allowance. A guardian may be appointed by a state court when a parent dies or is unable to care for the child...
Agent/Principal
Any person, corporation, partnership, or government agency might be called upon to act as agent without conflict of interest on behalf of a principal. A common example of an agent/principal relationshipthat implies fiduciary duty is the one between the executives of a company and its shareholders. The shareholders expect that the executives will make well-considered, prudent decisions on their behalf and in their best interests as owners. A similar fiduciary relationship exists between person...
Fiduciary duties may differ depending on the type of beneficiary that a fiduciary serves. However, the legal and ethical obligations related to protecting the interests of beneficiaries generally include the following duties.
Fiduciary duties are taken on by individuals and entities for various types of beneficiaries. Such relationships include lawyers acting for clients, company executives acting for stockholders, guardians acting for their wards, financial advisersacting for investors, and trustees acting for estate beneficiaries. An employee may even have a fiduciary...
A breach of fiduciary duty can lead to several consequences. Not all of them are legal consequences. 1. An accusation of a breach of fiduciary duty can hurt the reputation of a professional. A client can end a professional relationship because they don't trust in a professional’s careof the required fiduciary duty. 2. Steeper consequences can resul...
Several legal precedents and elements have been established to allow claims by those who have been harmed by a breach of fiduciary duty. Jurisdictions differ but the following four elements are generally essential if a plaintiff is to prevail in a breach of fiduciary duty claim.
A Duty of Loyalty
This example of a breach of fiduciary duty went to the Virginia Supreme Court in 2007. A lighting manufacturer and supplier sued a former employee in "Banks v. Mario Industries of Virginia, Inc." They claimed that the employee had established a directly competing business by allegedly using proprietary information acquired in their previous employment. The manufacturer didn't require its employees to sign a non-compete or confidentiality clause but the company handbook outlined related polici...
A Menswear Store vs. Ex-Employees
A high-end menswear store cited a breach of fiduciary duty in 2006 when it sued two of its former sales professionals for taking a job with a competitor, Saks Fifth Avenue. The department store was able to prove that it suffered actual losses after the salesmen left. The court ruled that the losses could not be attributed directly to the actions of its former employees and the suit failed.
Aiding and Abetting a Breach of Duty
A comptroller for a corporation embezzled $15 million from their employer by writing checks against their company's bank account and depositing them into another account at their own bank. The company sued the bank that took the deposits, alleging that it had aided and abetted a breach of fiduciary duty. The court ruled that there was insufficient evidence that the bank was aware of its role in the scam.
Fiduciary duties refer to how a fiduciary is legally committed to act for a principal or beneficiary. They include a duty of loyalty, a duty of care, a duty of prudence, and a duty of confidentiality. Fiduciary duties are meant to ensure that the fiduciary acts only in the best interests of a principal or beneficiary. The fiduciary must act diligen...
I. The Problem of Definition. A. The Uncertainty of the Fiduciary Concept. B. The Function and Purpose of the Fiduciary Concept. II. The Animating Forces of Fiduciary Duties. A. Essential Fiduciary Points of Emphasis. B. Valsan’s Emphasis: A Primary Focus on Conflicts of Interest.
Aug 8, 2024 · All employees are under a duty of fidelity to their employer. The duty of fidelity is also known as the Duty of good faith, or of loyalty. Fidelity is a broad concept containing a number of more specific duties, some of which overlap both with each other and with the duty of trust and confidence (see Practice Note: The term of trust and ...
Mar 25, 2010 · A recent decision from the Supreme Court of Canada significantly clarifies the law of "ad hoc" fiduciary relationships — Galambos v. Perez, 2009 SCC 48. The decision has potentially wide-ranging commercial implications, since an ad hoc fiduciary relation.
Definition of "fidelity". It refers to the level of loyalty or faithfulness. How to use "fidelity" in a sentence. The fidelity of the manager to the company principles impressed the board of directors.
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Feb 7, 2006 · In Canadian law, fiduciary obligation refers to a relationship in which one party (the fiduciary) is responsible for looking after the best interests of another party (the beneficiary).
