The Fiduciary Duty of Care

2019 ◽  
pp. 403-418 ◽  
Author(s):  
John C. P. Goldberg
Keyword(s):  
Tort Law ◽  
Fiduciary Duty ◽  
Duty Of Care ◽  
Private Law ◽  
Fiduciary Duties ◽  
Distinctive Features ◽  
Duty Of Loyalty

Fiduciary duties of care are at once familiar and strange. They partake of many of the characteristics of duties of care in other domains of private law, particularly tort law. But they also bear the distinctive marks of the fiduciary context. This chapter identifies two ways in which fiduciary duties of care tend to be distinct from tort duties of care. First, with some important exceptions, they are less demanding and less vigorously enforced. Second, breaches of the fiduciary duty of care can give rise to liability even if no injury results to the beneficiary. These distinctive features, the chapter argues, reflect judicial efforts to harmonize the fiduciary’s duty of care with her duty of loyalty. As such, they are defensible, even if not in all respects justified.

Fiduciary Principles in Investment Advice

2019 ◽  
pp. 144-165
Author(s):  
Arthur B. Laby
Keyword(s):  
Fiduciary Duty ◽  
Duty Of Care ◽  
Complex Nature ◽  
State Law ◽  
Fiduciary Duties ◽  
Legal Obligations ◽  
Standards Of Conduct ◽  
Investment Advisers ◽  
Definition Of ◽  
Investment Advice

This chapter examines the fiduciary principles governing investment advice. Fiduciary principles in investment advice are both straightforward and complex. They are straightforward because most investment advisers are considered fiduciaries and subject to strict fiduciary duties under federal and state law. Their complex nature arises from the fact that many individuals and firms provide investment advice but are not deemed investment advisers and, therefore, are not subject to a fiduciary obligation. This chapter first explains whether and when an advisory relationship gives rise to fiduciary duties by focusing on both federal and state law, as well as the individuals and firms that typically provide investment advice. In particular, it looks at certain persons and entities excluded from the definition of investment adviser and thus not subject to the Investment Advisers Act of 1940, namely broker-dealers, banks, and family offices as well as accountants, lawyers, teachers, and engineers. The chapter also considers fiduciaries under ERISA, the Investment Company Act, and the Commodity Exchange Act before discussing the fiduciary duty of loyalty and how it is expressed and applied in investment advisory relationships; the fiduciary duty of care and how it differs from other standards of conduct, such as a duty of suitability; and other legal obligations imposed on investment advisers and how those obligations relate to an adviser’s fiduciary duty. Finally, the mandatory or default terms with regard to an investment adviser’s fiduciary duties are explored, along with remedies available for breach of fiduciary duty.

Fiduciary Principles in Corporate Law

2019 ◽  
pp. 60-78
Author(s):  
Julian Velasco
Keyword(s):  
Voting Rights ◽  
Corporate Law ◽  
Fiduciary Duty ◽  
Duty Of Care ◽  
Profit Motive ◽  
Fiduciary Duties ◽  
Common Misconception ◽  
Strict Enforcement ◽  
Default Rules ◽  
Moral Requirements

This chapter examines fiduciary duty in corporate law. Fiduciary duty is pervasive as well as all encompassing in corporate law. One common misconception about fiduciary duty in corporate law is that it is merely aspirational. Fiduciary duties are not simply moral requirements, they are legal ones. They are not merely suggestions, they represent the demands of the law. Although corporate law has often compromised rather than insisting upon strict enforcement of fiduciary law principles, these compromises are due to practical considerations that are entirely consistent with the goals of fiduciary law. In corporate law, general fiduciary law principles are balanced with practical considerations concerning the profit motive in order to achieve the best overall result for the shareholders. Understanding this tension between ambition and practicality is key to understanding fiduciary duty in corporate law. This chapter first considers the triggers for fiduciary duty in corporate law before discussing the role that the duty of loyalty plays in corporate law. It then explores the duty of care in corporate law, along with other fiduciary duties such as good faith, takeover situations and contests for control, shareholder voting rights, and the duty to monitor and the duty to disclose. The chapter proceeds by analyzing mandatory and default rules regarding the extent to which fiduciary duties can be waived in corporate law and concludes with an overview of remedies for breach of fiduciary duty.

Fiduciary Principles in Contemporary Common Law Systems

2019 ◽  
pp. 564-582
Author(s):  
Matthew Conaglen
Keyword(s):  
United States ◽  
Common Law ◽  
The United States ◽  
Good Faith ◽  
Fiduciary Duty ◽  
Standards Of Care ◽  
Duty Of Care ◽  
Fiduciary Duties ◽  
Similarities And Differences ◽  
Fiduciary Relationships

This chapter examines the principles of fiduciary doctrine that are found in contemporary common law systems. More specifically, it considers the current similarities and differences between various jurisdictions such as England, Australia, Canada, and the United States. The similarities focus on the duties of loyalty, care and skill, and good faith, as well as when fiduciary duties arise and the kinds of interests that are protected by recognition of fiduciary relationships. The chapter also discusses the issue of differences between various jurisdictions with regard to the duty of care and skill before concluding with an analysis of differences between remedies that are made available in the various contemporary common law jurisdictions when a breach of fiduciary duty arises. It shows that the regulation of fiduciaries appears to be reasonably consistent across common law jurisdictions and across various types of actors, even as such actors are expected to meet differing standards of care. Statute plays a key role in the regulation of various kinds of fiduciary actors, especially corporate directors.

Shaping and Re-shaping the Duty of Loyalty in Japanese Law

2019 ◽  
Vol 14 (S1) ◽  
pp. S119-S146
Author(s):  
Eriko TAOKA
Keyword(s):  
Fiduciary Duty ◽  
Duty Of Care ◽  
Fundamental Nature ◽  
Duty Of Loyalty ◽  
Japanese Law ◽  
The Relationship ◽  
Conceptual Relationship ◽  
Corporate Trust

AbstractThe duty of loyalty has been notoriously vague since its introduction into Japanese law. The vagueness of the duty becomes particularly problematic because although the duty overlaps with the duty of care, a breach of each of the duties is subject to different remedial rules. By focusing primarily on duties owed by a trustee and agent, this article attempts to re-define the duty of loyalty and clarify the conceptual relationship between the duties of loyalty and care in Japanese law. The article first explains the current complexity in the scope and nature of the duty of loyalty, and the relationship between the duties of loyalty and care in corporate, trust, and agency laws in Japan. Second, borrowing ideas from Lionel Smith's account of the fundamental nature of the fiduciary duty, this article attempts to re-shape the concept of the duty of loyalty while properly differentiating it from the duty of care in Japanese law.

Managers’ Double Fiduciary Duty: to Stakeholders and to Freedom

2002 ◽  
Vol 12 (2) ◽  
pp. 189-214 ◽  
Author(s):  
Allen Kaufman
Keyword(s):  
Regulatory Framework ◽  
Fiduciary Duty ◽  
Fiduciary Duties ◽  
Professional Code ◽  
Duty Of Loyalty

Abstract:In providing an ethical guide for managers, the Clarkson Principles offer one part of a possible professional code, namely, that managers have a fiduciary duty—a duty of loyalty of the corporation’s stakeholders. However, the Clarkson Principles contain little advise for managers when they act politically to fashion the regulatory framework in which stakeholders negotiate. When managers participate in these arenas, I argue that they ought to assume a second fiduciary duty—a duty of loyalty to fair bargaining. Where the first duty of loyalty pertains to the firm’s “constituents,” the second refers to the firm’s “constitution”—to the rules by which the firm’s stakeholders bargain and to the background conditions that distribute advantages. Together, these two fiduciary duties establish the large good—development as freedom—from which a managerial profession can mature.

Fiduciary Principles in Legal Representation

2019 ◽  
pp. 263-285
Author(s):  
Richard W. Painter
Keyword(s):  
Conflicts Of Interest ◽  
Common Law ◽  
Fiduciary Duty ◽  
Professional Responsibility ◽  
Duty Of Care ◽  
Fiduciary Duties ◽  
Legal Representation ◽  
Mandatory Rules ◽  
The Subject ◽  
The Relationship

This chapter examines the fiduciary duties of lawyers, and especially how such duties shape—and are shaped by—their other professional responsibilities. It begins with a discussion of the legal basis of lawyers’ fiduciary duties as well as the circumstances that trigger a lawyer-client fiduciary relationship. It then considers the lawyers’ fiduciary duty of loyalty, focusing on the duty to avoid conflicts of interest, the duty of confidentiality owed by a lawyer to a client, the duty of candor, and the duty to communicate to the client information that the latter needs to make informed decisions about the subject matter of the representation. It also explores the lawyer’s fiduciary duty of care, including the duty to familiarize himself with the client’s affairs and to safeguard confidential information; the relationship between fiduciary duties and other duties of professional responsibility; cases where lawyers are subject to the specific duties of a common law trustee; and two types of mandatory rules to which lawyers, as professional fiduciaries, are subject and that cannot be waived with client consent: mandatory rules of professional responsibility and generally applicable laws. The chapter concludes with an analysis of remedies available when a lawyer commits a breach of fiduciary duty, along with the unique challenges faced by lawyers when they also become trustees for their clients or third persons.

scholarly journals Justifying Fiduciary Duties

2013 ◽  
Vol 58 (4) ◽  
pp. 969-1023 ◽  
Author(s):  
Paul B. Miller
Keyword(s):  
Private Law ◽  
Legal Capacity ◽  
Alternative Account ◽  
Fiduciary Duties ◽  
Legal Relationship ◽  
Core Set ◽  
Duty Of Loyalty ◽  
Fiduciary Relationships

Fiduciary duties are critical to the integrity of a remarkable variety of relationships, including those between trustee and beneficiary, director and corporation, agent and principal, lawyer and client, doctor and patient, parent and child, and guardian and ward. Notwithstanding their variety, all fiduciary relationships are presumed to enjoy common characteristics and to attract a core set of demanding legal duties, most notably a duty of loyalty. Surprisingly, however, the justification for fiduciary duties is an enigma in private law theory. It is unclear what makes a relationship fiduciary and why fiduciary relationships attract fiduciary duties. This article takes up the enigma. It assesses leading reductivist and instrumentalist analyses of the justification for fiduciary duties. Finding them wanting, it offers an alternative account of the juridical justification for fiduciary duties. The author contends that the fiduciary relationship is a distinctive kind of legal relationship in which one person (the fiduciary) exercises power over practical interests of another (the beneficiary). Fiduciary power is a form of authority derived from the legal capacity of the beneficiary or a benefactor. The duty of loyalty is justified on the basis that it secures the exclusivity of the beneficiary’s claim over fiduciary power so understood.

Directors’ Duties

2020 ◽  
pp. 175-222
Author(s):  
Paul Davies
Keyword(s):  
Conflict Of Interest ◽  
Company Law ◽  
Duty Of Care ◽  
Fiduciary Duties ◽  
The Core ◽  
The Law ◽  
Duty Of Loyalty ◽  
Substantive Law

This chapter examines the law on directors’ duties, as restated in the Companies Act 2006, other than the core duty of loyalty which is discussed in Chapter 2. It covers the duty of care, the duty to act within powers, the duty to exercise independent judgement, and, most importantly, the application of fiduciary duties to various types of conflict of interest. Many of the most interesting doctrinal questions about company law arise in this area and it is righly placed at the center of many company law courses. However, it may that other sets of rules, discussed in earlier chapters, are more important in practice in the regulation of internal company relations. In addition to the substantive law, the remedies available in respect of breaches are analysed, as is the freedom of shareholders to waive breaches of duty, both after and before the event.

scholarly journals How contractual terms determine fiduciary duties: a two-stage process

2019 ◽  
Vol 70 (2) ◽  
pp. 242-262
Author(s):  
David Gibbs-Kneller ◽  
Derek Whayman
Keyword(s):  
Fiduciary Duty ◽  
Single Factor ◽  
Two Stage ◽  
Fiduciary Duties ◽  
Second Stage ◽  
Stage Process ◽  
Duty Of Loyalty ◽  
Two Stages

The determination of the scope of the fiduciary duty of loyalty, when created by contract, is not a unitary process. It is raised following a multi-factorial enquiry, which considers the nature of the engagement, in a first stage. Here, no single factor is conclusive. It is then, in a separate, second stage, reduced by qualifying contractual terms, which are applied almost strictly logically. This second stage uses the contractual doctrines of interpretation and implication. However, since it is a form of the fiduciary doctrine of authorisation, those contractual doctrines are modified according to fiduciary principles. We argue this follows from the underlying nature of the fiduciary obligation as a way of resolving its internal tensions. While this division has not yet been fully recognised in the cases, the courts have been inching towards it. However, not fully recognising this inevitable division and eliding the two stages has led to defective reasoning and outcomes.

scholarly journals WHO IS MY NEIGHBOUR? THE DUTY OF CARE IN THE IMMIGRATION CONTEXT: A PERSPECTIVE FROM CANADIAN CASE LAW

2017 ◽  
Vol 33 (2) ◽  
pp. 117
Author(s):  
Sasha Baglay
Keyword(s):  
Tort Law ◽  
Case Law ◽  
The State ◽  
Duty Of Care ◽  
Power Imbalance ◽  
Private Law ◽  
Absolute Power ◽  
Host State ◽  
The Absolute ◽  
Nuanced Understanding

This article reviews and analyzes recent Canadian jurisprudence on immigration-related torts, situating it in the context of the contrasting logic of immigration and tort law. Immigration law’s focus on the absolute power of the state to control admission directs courts away from the recognition of the duty of care. In contrast, tort law theory does not preclude the possibility of private law duties to non-citizens, especially in light of the absence of other effective remedies to address the power imbalance between the host state and the non-citizen. The article examines how these two narratives were negotiated in cases of alleged negligence in immigration processing. It problematizes certain aspects of the current construction of the duty of care towards non-citizens and offers some suggestions for a more nuanced understanding of the factors considered under the Anns/Cooper test. Dans cet article, l’auteure examine et analyse la jurisprudence canadienne récente des délits civils relatifs à l’immigration en la situant dans le contexte de la logique d’opposition du droit de l’immigration et du droit de la responsabilité civile délictuelle. Le droit de l’immigration, qui est centré sur le pouvoir absolu de l’État de contrôler l’admission d’immigrants, fait oublier aux tribunaux la reconnaissance du devoir de diligence. En revanche, la théorie du droit de la responsabilité civile délictuelle n’écarte pas la possibilité d’obligations de droit privé envers des non-nationaux, surtout en l’absence d’autres recours applicables pour résoudre le déséquilibre de pouvoir entre l’État d’accueil et le non-national. Dans cet article, l’auteure étudie la manière dont ces deux discours ont été conciliés dans des cas de négligence présumée dans le traitement de demandes d’immigration. L’auteure définit le problème que posent certains aspects de l’interprétation actuelle du devoir de diligence envers des non-nationaux et présente quelques idées permettant une compréhension nuancée des facteurs pris en compte dans la cause type Anns/Cooper.

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