Moving Along the Continuum of Loyalty From a Standard Towards Rules

This article focuses on the location of the duty of loyalty—a unique legal norm in Common Law jurisdictions—both actual and desirable, on the continuum between rules and standards. A rule is a relatively ‘closed’ technical norm, at a high level of specificity; it requires little judicial discretion. A standard is an ‘open’ norm, with a greater degree of flexibility, that requires the exercise of discretion. The insights from this jurisprudential perspective are used to reveal the preferred way for further developing the duty of loyalty. The article explains that ‘loyalty,’ intuitively classified as a ‘pure’ standard, has been reconstructed over time as more specific rules. Moreover, it suggests that, ideally, this movement should continue; namely, when applying loyalty to a specific case, courts should include informative content that would promote predictability. It then illustrates that, unfortunately, this road is not always taken by the courts. A decision to retain loyalty as an ad hoc standard, or an inverse attempt to delineate the boundaries of this norm, has implications on the certainty, consistency, and ethical content of the law. Considering that this duty spreads across different legal fields, personal and commercial, the significance of this discussion becomes all the more evident.

EMPLOYEE LOYALTY IN RELATION TO THE WHISTLEBLOWER DIRECTIVE

The whistleblower protection directive may have a significant impact on the essence of understanding employee loyalty in employment relationships. In this paper I argue that the possibility of whistleblowing does not contradict employee duties as expressed in Article 100 § 2 section 4 of the Labor Code. In my opinion, the thesis should be put forward that the employee’s duty of loyalty is limited to the employer’s lawful actions. It would be unacceptable to state that the employment relationship restricts the employee’s freedom of speech in the sense that it prohibits the employee from opposing the employer’s unlawful conduct. Moreover, in my view, the employee’s duty of loyalty should be interpreted in such a way that it is horizontal in nature. This is because it refers to business relations between market entities. The doctrine and judicature extensively describe breaches of the duty of loyalty by employees in the context of horizontal relationships, relating to other market players, particularly those engaged in competitive activity (the unit-unit relationship). In contrast, the provisions of the Directive on the protection of whistleblowers are vertical standards, relating to the relationship between the individual and the state (public interest). Thus, in my view, the duty of loyalty to the employer cannot outweigh the possibility of acting in the public interest, which is emanated by the provisions of the Directive.

Trends and Development of the Directors’ Duty of Loyalty in China: A Case Analysis

Covering a central theme in corporate law development, this paper discusses the pragmatic utility of the common-law-originated duty of loyalty of company directors in the civil law context of China. The reception of legal transplantation in a host environment remains a contentious theme, and it seems to be an opportune time to study relevant cases that have been adjudicated since China’s statutory inauguration of the directors’ duty of loyalty in 2005, in the sense that more than 10 years of practice has resulted in ample evidence on the practical effects of this transplanted duty. Through an analysis of 526 cases on the basis of eight attributes, we discovered some commendable features, including increasing accessibility of the law and a differentiation of various types of directors’ duties of loyalty. Meanwhile, the selective adoption norm customary to Chinese culture has to a certain extent compromised the intended goals of greater legislative clarity, judicial consistency and in turn balanced and sustainable businesses, demonstrated in several incompatibilities between transplanted duties and domestic legal institutions. Reshaping the conventional transplantation ideal that commercial laws are easily transferable, the paper suggests the construction of a broad collateral regime for greater congruence between laws and existing institutions.

Loyalty in Civil-Law Relationships as Found in the Polish Law

This paper discusses manifestations of loyalty as found in selected civil-law regulations, as well as the possible consequences of disloyalty, either during negotiations or for the duration of the obligation relationship, and as exemplified by Actio pauliana. Furthermore, it explores situations where ‘contractual’ loyalty stands in conflict with behaviour loyal towards other participants in the economy. It has been established that the categories of norms wherein broadly understood loyalty plays a special role are a part of the civil-law principles. It has been demonstrated that due to the unique nature of each situation, the introduction of the duty of loyalty as a general directive would be undesirable.

6. The Implied Terms of the Personal Employment Contract

This chapter first discusses the role played by implied terms of the employment contract. It then turns to the implied terms which impose obligations on the employer. These include the duty to provide work, pay wages, exercise reasonable care for the physical and psychiatric well-being of the employee; the implied term of mutual trust and confidence; and the discretionary benefit implied term and anti-avoidance implied term. The final section covers the implied terms imposing duties on employees. These include the duty to work and obey instructions and orders; the duty to adapt, exercise care, and co-operate; the duty of mutual trust and confidence; and the duty of loyalty, fidelity, and confidence.

Loyalty and Disclosure in Legal Ethics

As fiduciaries, lawyers owe duties of loyalty to their clients, and such duties are widely understood to entail strong duties of confidentiality. This article addresses the question of whether loyalty-based duties of confidentiality preclude the legal system from imposing on lawyers duties to disclose that their clients have been engaging in financial fraud. It distinguishes two possible bases for such duties of disclosure: alleged duties of care to investors who will suffer financial harm if these frauds are not revealed, and legislative mandates requiring lawyers to report evidence of legal violations to a government institution. The latter—driven by a “gatekeeping” rationale, and illustrated here by a (failed) proposal of the United States Securities and Exchange Commission—is different in substance and structure from the former, “duty-of-care” rationale. The article argues that, while there may be good arguments based on a lawyer’s role-based duty of loyalty to a reject a duty-of-care based rationale for disclosure duties, these arguments do not defeat the gatekeeping, legislative-mandate rationales for disclosure duties. While a stringent duty of loyalty to a client may indeed conflict with the structure of duties of care to third parties, it need not conflict with a positive mandate to report legal violations.

Motives and Fiduciary Loyalty

How, if at all, do motives matter to loyalty? We have argued that loyalty (and the duty of loyalty in fiduciary law) has a cognitive dimension. This kind of “cognitivist” account invites the counterargument that, because most commercial fiduciary relationships involve financial considerations, purity of motive cannot be central to loyalty in the fiduciary context. We contend that this counterargument depends on a flawed understanding of the significance of motive to loyalty. We defend a view of the importance of motivation to loyalty that we call the compatibility account. On this view, A acts loyally toward B only if A’s motives are compatible with A’s robustly assigning non-derivative significance to the interests of B. We show that the compatibility account describes the motivational structure of fiduciary loyalty and of loyalty as such. This account provides a realistic picture of motivation and helps respond to two broader criticisms of cognitivism: first, that attributing significance to motivation is paradoxical; second, that attributing significance to motive would make fiduciary law impossible to administer. We also show that the compatibility account can help explain features of ineffective assistance of counsel jurisprudence under the Sixth Amendment to the U.S. Constitution, which draws on the lawyer’s duty of loyalty toward the client.