Relationships can be a complicated subject depending on the parties involved and at what capacity. Some relationships are based on love, and some are contractual; and hopefully all are based on trust.
Specific relationships are defined by Florida law and provide that one or both parties have specific, legal duties to each other. In some instances, parties have what is called a fiduciary duty to another person, or other people.
Visit this site for a sneak peak on fiduciary duties in the state of Florida.
So, what exactly is a fiduciary duty? A fiduciary duty is one of the most elusive concepts in American law. Many legal analysts believe it is important to examine the relationships that have fiduciary “components” rather than attempt to define what a fiduciary duty actually is.
Essentially, a fiduciary duty is created when one person agrees to undertake a responsibility to act primarily for the other person’s benefit in matters related to that undertaking. A fiduciary relationship cannot exist when only one party wants it to exist—it must be a mutual agreement.
A person with a fiduciary duty to someone else must act in good faith, loyalty, and candor to the other person. When a fiduciary duty is created, the one(s) with the duty must not abuse that trust and must refrain from self interest. That means not exploiting a fiduciary relationship for the fiduciary’s own personal benefit.
Okay. Enough of the legal mumbo jumbo. Let’s go back to talking about relationships again for a second. One of the best ways to describe fiduciary duties is to look at what types of relationships create these type of duties. While some fiduciary duties may be determined to exist on a case-by-case basis, there are some relationships that alway create fiduciary duties.
Here are a few examples:
1. Attorney/Client Relationship: When an attorney/client relationship is established, the attorney must act in the client’s best interests and put the client’s interests ahead of his or her own. That means that an attorney cannot prolong a case simply to earn more money from the client.
2. Agent/Principal: When someone serves as an agent for another person, a fiduciary relationship is then established. A great example of an agent/principal relationship is between an athlete and his or her agent. A sports agent negotiates on his or her client’s behalf in order to obtain and negotiate the best possible deals for the athlete.
Anytime a contractual relationship exists where an agent agrees to act on behalf of his or her principal, a fiduciary relationship is created.
3. Corporate officer/Shareholder: Officers of a corporation, such as the president, vice president, secretary, etc., all have fiduciary duties to the corporation’s shareholders to act in the best interests of the shareholders. Corporate officers must act according to the shareholders’ (reasonable) wishes, which in the overwhelming majority of the time means making decisions that will maximize the shareholders’ profits.
Other examples of fiduciary relationships include trustee/beneficiary and executive/heir. Read here for more information and examples of fiduciary duties and relationships.
Getting Down to Business with a West Palm Beach Business Litigation Attorney
If you have questions regarding whether you owe a fiduciary duty to someone, or whether you believe someone breached their fiduciary duty owed to you, contact a business litigation attorney who has experience in these matters.
Fiduciary duties should not be taken lightly and if a court determines a fiduciary duty was breached, there will be significant economic and possible criminal consequences.
Visit Feaman Law for more information on working with a West Palm Beach business litigation attorney.