View source for Fiduciary

{{Short description|Person who holds a legal or ethical relationship of trust}}
{{about|the legal term|optical field-of-view markers|Fiduciary marker}}
[[Image:Microcosm of London Plate 022 - Court of Chancery, Lincoln's Inn Hall edited.jpg|thumb|right|upright=1.4|The [[Court of Chancery]], which governed fiduciary relations in England prior to the Judicature Acts]]
A '''fiduciary''' is a person who holds a [[Law|legal]] or ethical relationship of [[Trust (social sciences)|trust]] with one or more other [[Party (law)|parties]] ([[legal person]] or group of persons). Typically, a fiduciary prudently takes care of money or other [[asset]]s for another person. One party, for example, a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to another party, who, for example, has entrusted funds to the fiduciary for safekeeping or investment. Likewise, [[financial adviser]]s, [[financial planner]]s, and asset managers, including managers of pension plans, endowments, and other tax-exempt assets, are considered fiduciaries under applicable statutes and laws.<ref>Lemke and Lins, ''ERISA for Money Managers'', Chapter 1 (Thomson West, 2013)</ref>  In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, [[good faith]], reliance, and trust in another whose aid, advice, or protection is sought in some matter.<ref name="156 CLR 41">{{Cite AustLII|HCA|64|1984|litigants=[[Hospital Products Ltd v United States Surgical Corporation]] |parallelcite=(1984) 156 [[Commonwealth Law Reports|CLR]] 41 |date=25 October 1984 |courtname=auto}}.</ref>{{rp|68}}<ref name="186 CLR 71">{{cite AustLII|HCA|57|1996|litigants=[[Breen v Williams]] (Medical records access case) |courtname=auto |parallelcite=(1996) 186 [[Commonwealth Law Reports|CLR]] 71}}.</ref> In such a relation, good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.

{{quote|A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.|[[Peter Millett, Baron Millett|Lord Millett]]|''[[Bristol and West Building Society v Mothew]]''<ref>{{cite BAILII |litigants=Mothew (t/a Stapley & Co) v Bristol & West Building Society |link=Bristol and West Building Society v Mothew |court=EWCA |division=Civ |year=1996 |num=533 |parallelcite= [1998] Ch 1|date=24 July 1996 |courtname=auto}}.</ref>}}

'''Fiduciary duties''' in a financial sense exist to ensure that those who manage other people's money act in their beneficiaries' interests, rather than serving their own interests. 

A '''fiduciary duty'''<ref>{{cite web |url=http://definitions.uslegal.com/b/breach-of-fiduciary-duty |title=Breach of Fiduciary Duty Law & Legal Definition. |publisher=Legal Definitions Legal Terms Dictionary}}</ref> is the highest [[standard of care]] in equity or law. A fiduciary is expected to be extremely loyal to the person to whom he owes the duty (the "[[principal (commercial law)|principal]]") such that there must be no conflict of duty between fiduciary and principal, and the fiduciary must not profit from their position as a fiduciary,<ref name="Keech v Sandford">{{cite BAILII |litigants=[[Keech v Sandford]] |court=EWHC |division=Ch |year=1726 |num=J76|courtname=auto |parallelcite=(1726) 2 Eq Cas Abr 741, 25 ER 223}}</ref> unless the principal consents.<ref>{{cite BAILII|litigants=Queensland Mines Ltd v Hudson |court=UKPC |year=1978 |num=2 |format=1 |courtname=auto |juris=NSW, Australia |parallelcite=(1978) 52 [[Australian Law Journal Reports|ALJR]] 399}}</ref> The nature of fiduciary obligations differs among jurisdictions. In Australia, only proscriptive or negative fiduciary obligations are recognised,<ref name="186 CLR 71" />{{rp|113}}<ref name="207 CLR 165">{{cite AustLII|HCA|31|2001||litigants=[[Pilmer v Duke Group Ltd (in liq)]] |courtname=auto |parallelcite=(2001) 207 [[Commonwealth Law Reports|CLR]] 165}}</ref>{{rp|198}} <ref>{{cite AustLII|WASCA|157|2012|litigants=Westpac Banking Corporation v The Bell Group (In Liq) [No 3] |courtname=auto |pinpoint=[897]-[902]}}.</ref> whereas in Canada, fiduciaries can come under both proscriptive (negative) and prescriptive (positive) fiduciary obligations.<ref name="McInerney v MacDonald">{{cite CanLII|litigants=McInerney v MacDonald  |courtname=auto |court=scc |year=1992 |num=57 |format=canlii |parallelcite=[1992] 2 SCR 138}}.</ref><ref>''BLB Corp of Australia Establishment v Jacobsen'' (1974) 48 [[Australian Law Journal Reports|ALJR]] 372 [[High Court of Australia|High Court]] (Australia). [http://www.austlii.edu.au/cgi-bin/LawCite?cit=48%20ALJR%20372 LawCite Records] {{Webarchive|url=https://web.archive.org/web/20191215080630/http://www.austlii.edu.au/cgi-bin/LawCite?cit=48%20ALJR%20372 |date=2019-12-15 }}.</ref>

In [[England|English]] [[common law]], the fiduciary relation is an important concept within a part of the legal system known as [[equity (law)|equity]]. In the United Kingdom, the [[Judicature Acts]] merged the [[Court of equity|courts of equity]] (historically based in England's [[Court of Chancery]]) with the courts of common law, and as a result the concept of fiduciary duty also became applicable in [[common law]] courts.

When a fiduciary duty is imposed, equity requires a different, stricter standard of behavior than the comparable [[tortious]] [[duty of care]] in common law. The fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, not to be in a situation where their fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from their fiduciary position without knowledge and consent. A fiduciary ideally would not have a [[conflict of interest]]. It has been said that fiduciaries must conduct themselves "at a level higher than that trodden by the crowd"<ref name="Meinhard v Salmon">''[[Meinhard v Salmon]]'' (1928) 164 NE 545 at 546.</ref> and that "[t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty".<ref name="ASIC v Citigroup">{{cite AustLII|FCA|963|2007|litigants=Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (No. 4) |courtname=auto |parallelcite=[2007] 62 [[Australian Corporations and Securities Reports|ACSR]] 427}}</ref>{{rp|289}}

==In different jurisdictions==
Different jurisdictions regard fiduciary duties in different lights. [[Canadian law]], for example, has developed a more expansive view of fiduciary obligation than [[American law]],<ref name="Rojas 2014 59–128">{{cite journal
 |last=Rojas
 |first=Claudio R.
 |year=2014
 |title=An Indeterminate Theory of Canadian Corporate Law
 |journal=University of British Columbia Law Review
 |volume=47
 |issue=1
 |pages=59–128
 |ssrn=2391775
}}</ref> while [[Australian law]] and [[United Kingdom law|British law]] have developed more conservative approaches than either the United States or [[Canada]].<ref name="186 CLR 71"/>
In Australia, it has been found that there is no comprehensive list of criteria by which to establish a fiduciary relationship.<ref name="ASIC v Citigroup"/> Courts have so far refused to define the concept of a fiduciary, instead preferring to develop the law on a case-by-case basis and by way of analogy.<ref name="156 CLR 41"/><ref name="207 CLR 165"/> Fiduciary relationships are of different types and carry different obligations so that a test appropriate to determine whether a fiduciary relationship exists for one purpose might be inappropriate for another:<ref name="156 CLR 41"/>

In 2014 the [[Law Commission (England and Wales)]] reviewed the fiduciary duties of investment intermediaries, looking particularly at the duties on pension trustees. They commented that the term "fiduciary" is used in many different ways. 
{{quote|Fiduciary duties cannot be understood in isolation. Instead they are better viewed as ‘legal [[Spackling paste|polyfilla]]’, molding themselves flexibly around other legal structures, and sometimes filling the gaps. | [[Law Commission (England and Wales)]] ''Fiduciary Duties of Investment Intermediaries'' Law Com 350, para 3.11 <ref>{{cite web|url=http://lawcommission.justice.gov.uk/areas/fiduciary_duties.htm |title=Fiduciary Duties of Investment Intermediaries |publisher=[[Law Commission (England and Wales)|Law Commission]] |url-status=dead |archive-url=https://web.archive.org/web/20140924041547/http://lawcommission.justice.gov.uk/areas/fiduciary_duties.htm |archive-date=2014-09-24 }}</ref> }}

The question of who is a fiduciary is a "notoriously intractable" question and this was the first of many questions. In ''[[Securities and Exchange Commission v. Chenery Corporation (1943)|SEC v. Chenery Corporation]]'',<ref>''[[Securities and Exchange Commission v. Chenery Corporation (1943)|SEC v. Chenery Corporation]]'', {{ussc|318|80|1943|format=j}}</ref> [[Felix Frankfurter|Frankfurter J]] said,
	 	
{{Cquote|To say that a man is a fiduciary only begins the analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from his duty?}}

The law expressed here follows the general body of elementary fiduciary law found in most common law jurisdictions; for in-depth analysis of particular jurisdictional idiosyncrasies please consult primary authorities within the relevant jurisdiction.

This is especially true in the area of Labor and Employment law. In [[Canada]] a fiduciary has obligations to the employer even after the employment relationship is terminated, whereas in the United States the employment and fiduciary relationships terminate together.

==Fiduciary duties under Delaware corporate law==
{{see also|US corporate law}}
The corporate law of [[Delaware]] is the most influential in the United States, as more than 50% of publicly traded companies in the United States, including 64% of the Fortune 500, have chosen to incorporate in that state.<ref>{{Cite web|url = https://corp.delaware.gov/aboutagency/|title = About Agency|access-date = August 28, 2015|website = The Official Website of the State of Delaware|archive-date = February 28, 2007|archive-url = https://web.archive.org/web/20070228002805/http://www.state.de.us/corp/aboutagency.shtml|url-status = live}}</ref> Under Delaware law, officers, directors and other control persons of corporations and other entities owe three primary fiduciary duties, (1) the [[duty of care]], (2) the [[duty of loyalty]] and (3) the [[duty of good faith]].<ref name=":0">{{Cite web|url = https://www.themalawyer.com/fiduciary-duties-minority-shareholder-rights/|title = Fiduciary Duties: Minority Shareholder Rights|date = June 27, 2015|access-date = August 28, 2015|website = The M&A Lawyer Blog|publisher = Jasso Lopez PLLC|last = Lopez|first = Erik}}</ref>

The duty of care requires control persons to act on an informed basis after due consideration of all information. The duty includes a requirement that such persons reasonably inform themselves of alternatives. In doing so, they may rely on employees and other advisers so long as they do so with a critical eye and do not unquestionably accept the information and conclusions provided to them. Under normal circumstances, their actions are accorded the protection of the business judgment rule, which presumes that control persons acted properly, provided that they act on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.<ref name=":0" />

The duty of loyalty requires control persons to look to the interests of the company and its other owners and not to their personal interests. In general, they cannot use their positions of trust, confidence and inside knowledge to further their own private interests or approve an action that will provide them with a personal benefit (such as continued employment) that does not primarily benefit the company or its other owners.<ref name=":0" />

The duty of good faith requires control persons to exercise care and prudence in making business decisions—that is, the care that a reasonably prudent person in a similar position would use under similar circumstances. Control persons fail to act in good faith, even if their actions are not illegal, when they take actions for improper purposes or, in certain circumstances, when their actions have grossly inequitable results. The duty to act in good faith is an obligation not only to make decisions free from self-interest, but also free of any interest that diverts the control persons from acting in the best interest of the company. The duty to act in good faith may be measured by an individual's particular knowledge and expertise. The higher the level of expertise, the more accountable that person will be (e.g., a finance expert may be held to a more exacting standard than others in accepting a third party valuation).<ref name=":0" />

At one time, courts seemed to view the duty of good faith as an independent obligation. However, more recently, courts have treated the duty of good faith as a component of the duty of loyalty.<ref name=":0" /><ref>{{cite web|url=https://casetext.com/case/stone-v-ritter|archive-url=https://web.archive.org/web/20171110061824/https://casetext.com/case/stone-v-ritter|url-status=dead|archive-date=November 10, 2017|title=Stone v. Ritter, 911 A.2d 362 - Casetext|website=casetext.com}}</ref>
[[File:Fiduciary duty diagram.png|thumb|Diagram illustrating fiduciary duty, placing good faith within duty of loyalty]]

==Fiduciary duty in Canadian corporate law==

In Canada, directors of corporations owe a fiduciary duty. A debate exists as to the nature and extent of this duty following a controversial landmark judgment from the [[Supreme Court of Canada]] in ''[[BCE Inc. v. 1976 Debentureholders]]''. Scholarly literature has defined this as a "tripartite fiduciary duty", composed of (1) an overarching duty to the corporation, which contains two component duties—(2) a duty to protect shareholder interests from harm, and (3) a procedural duty of "fair treatment" for relevant stakeholder interests. This tripartite structure encapsulates the duty of directors to act in the "best interests of the corporation, viewed as a good corporate citizen".<ref name="Rojas 2014 59–128"/>

==Relationships==
The most common circumstance where a fiduciary duty will arise is between a [[trustee]], whether real or juristic, and a [[beneficiary]]. The trustee to whom property is legally committed is the legal—i.e., common law—owner of all such property. The beneficiary, at law, has no legal title to the [[Trust (law)|trust]]; however, the trustee is bound by equity to suppress their own interests and administer the property only for the benefit of the beneficiary. In this way, the beneficiary obtains the [[Use (law)|use]] of property without being its technical owner.

Others, such as corporate [[Directors' duties|directors]], may be held to a fiduciary duty similar in some respects to that of a trustee. This happens when, for example, the directors of a bank are trustees for the depositors, the directors of a corporation are trustees for the stockholders or a guardian is trustee of their ward's property. A person in a sensitive position sometimes protects themselves from possible conflict of interest charges by setting up a ''[[blind trust]]'', placing their financial affairs in the hands of a fiduciary and giving up all right to know about or intervene in their handling.

The fiduciary functions of trusts and agencies are commonly performed by a [[trust company]], such as a [[commercial bank]], organized for that purpose. In the United States, the [[Office of the Comptroller of the Currency]] (OCC), an agency of the [[United States Department of the Treasury]], is the primary [[Bank regulation|regulator]] of the fiduciary activities of [[federal savings associations]].

When a court desires to hold the offending party to a transaction responsible so as to prevent unjust enrichment, the judge can declare that a fiduciary relation exists between the parties, as though the offender were in fact a trustee for the partner.

Relationships which routinely attract by law a fiduciary duty between certain classes of persons include these:

* [[Trustee]]/[[beneficiary (trust)|beneficiary]];<ref name="Keech v Sandford"/><ref name="Boardman v Phipps">{{cite BAILII |litigants=[[Boardman v Phipps]] |court=UKHL |year=1966 |num=2 |courtname=auto |parallelcite=[1967] 2 [[Appeal Cases Law Reports|AC]] 46}}.</ref>
* [[Conservatorship|Conservator]]s and [[legal guardian]]s/[[Ward (law)|ward]]s;
* [[Agent (law)|Agent]]s, attorney in fact usually from written grant of authority by principal, [[broker]]s and [[Factor (agent)|factor]]s/[[Principal (commercial law)|principal]]s;<ref>{{cite AustLII|VicLawRp|19|1927|litigants=McKenzie v McDonald |courtname=auto}}.</ref><ref name="ASIC v Citigroup"/><ref name="2012 FCA 1028">{{cite AustLII|FCA|1028|2012|litigants=Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) |courtname=auto}}.</ref>
* [[Buyer agency agreement|Buyer agent]] ([[real estate broker]])/buyer client;
* Confidential advisor including [[financial adviser]] and [[investment advisor]]/advisee or client;<ref name="207 CLR 165"/><ref name="1991 FCA 73">{{cite AustLII|FCA|73|1991|litigants=Commonwealth Bank of Australia v Smith |courtname=auto}}.</ref><ref name="Daly v SSE">{{cite AustLII|HCA|25|1986|litigants=Daly v The Sydney Stock Exchange Ltd |courtname=auto |parallelcite=(1986) 160 [[Commonwealth Law Reports|CLR]] 371}}.</ref><ref>{{cite AustLII|FCAFC|65|2014|litigants=ABN AMRO Bank NV v Bathurst Regional Council |courtname=auto}}.</ref>
* [[Lawyer]]/client<ref>''Sims v Craig Bell & Bond'', [1991] 3 [[New Zealand Law Reports|NZLR]] 535, [[High Court of New Zealand|High Court]] (New Zealand).</ref><ref>''People v. Martinez'', 213 P.3d 77, 93 (Cal. 2009)</ref><ref>{{cite AustLII|VSC|82|2004|litigants=Maher v Millennium Markets Pty Ltd |courtname=auto}}.</ref> (a solicitor is presumed to have a fiduciary duty);<ref>{{Cite web|url=http://swarb.co.uk/tyrrell-v-the-bank-of-london-and-sir-j-v-shelley-and-others-hl-27-feb-1862/|title=Tyrrell v The Bank Of London And Sir J v Shelley And Others; HL 27 Feb 1862|date=2015-08-25|language=en-US|access-date=2016-07-31|archive-date=2016-08-18|archive-url=https://web.archive.org/web/20160818032101/http://swarb.co.uk/tyrrell-v-the-bank-of-london-and-sir-j-v-shelley-and-others-hl-27-feb-1862/|url-status=live}}</ref>
* [[Executor]]s and [[Administrator (law)|administrator]]s/[[legatee]]s and [[Inheritance|heir]]s;
* Corporate [[Partnership|partner]]s, [[joint venture]]rs, [[Board of directors|directors]] and officers/company and [[Shareholder|stockholder]]s;<ref>''[[Guth v. Loft Inc.]]'', 5 A. 2d 503 (Del. Ch. 1939)</ref><ref>{{cite BAILII|litigants=In Plus Group Ltd. & Ors v Pyke|link=In Plus Group Ltd v. Pyke |court=EWCA |division=Civ |year=2002 |num=370 |courtname=auto |date=21 March 2002}}</ref><ref>{{cite CanLII |litigants=Peoples Department Stores Inc. (Trustee of) v. Wise |link=Peoples Department Stores Inc. (Trustee of) v. Wise |year=2004 |court=scc |num=68 |parallelcite=[2004] 3 SCR 461 |date=2004-10-29 |courtname=auto}}</ref><ref>{{cite BAILII|litigants= Regal (Hastings) Ltd v Gulliver|link=Regal (Hastings) v Gulliver |court=UKHL |year=1942 |num=1 |courtname=auto |parallelcite=[1967] 2 [[Appeal Cases Law Reports|AC]] 134 |date=20 February 1942}}</ref><ref name="188 CLR 449">{{cite AustLII|HCA|23|1997|litigants=Maguire & Tansey v Makaronis |courtname=auto |parallelcite=(1997) 188 [[Commonwealth Law Reports|CLR]] 449}}.</ref>
* [[Board of directors]] / [[legal person]]s, including [[Company (law)|companies]];<ref>{{cite AustLII|HCA|3|1936|litigants=Furs Ltd v Tomkies |courtname=auto |parallelcite=[http://www.austlii.edu.au/au/cases/cth/HCA/1936/3.pdf (1936) 54 {{abbr|CLR|Commonwealth Law Reports}} 583]}}.</ref><ref>''Woolworths Ltd v Kelly'', (1991) 22 [[NSW Law Reports|NSWLR]] 189.</ref><ref>''[[Re Saul D Harrison & Sons plc]]'', [1995] 1 BCLC 14, [1994] BCC 475.</ref>
* Partner/partner;<ref name="Meinhard v Salmon"/><ref name="154 CLR 178">{{cite AustLII|HCA|36|1984|litigants=Chan v Zacharia |courtname=auto |parallelcite=(1984) 154 [[Commonwealth Law Reports|CLR]] 178}}.</ref><ref>''Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd'', [1988] 2 {{abbr|Qd R|Queensland Reports}} 1.</ref>
* Senior employee/company;<ref>''Green & Clara Pty Ltd v Bestobell Industries Pty Ltd'', [1982] WAR 1</ref>
* [[Retirement]] plan administrators (including [[401(k)]] plans)/retirees and workers;<ref>''[[Vivien v. Worldcom|Vivien v. WorldCom, Inc.]]'', No. 02-01329 WHA (N.D. Cal. July. 26, 2002)</ref>
* [[Retirement account advisor]]s;<ref>{{cite web |url=http://www.pwc.com/en_US/us/financial-services/regulatory-services/publications/assets/dol-fiduciary-standards.pdf <!-- See also http://www.pwc.com/us/en/financial-services/regulatory-services/publications/dol-fiduciary-standards.jhtml --> |title=Fiduciary duty proposal: Disruptors at the gate |publisher=PwC Financial Services Regulatory Practice |date=August 2015}}</ref>
* [[Corporate promoter|Promoter]]s/company and related subscribers;
* [[Liquidator (law)|Liquidator]]/company;<ref>{{cite BAILII|litigants=Official Receiver (Appellant) v. Wadge Rapps & Hunt (a firm) and another ("Re Pantmaenog Timber Co Ltd") |court=UKHL |year=2003 |num=49  |courtname=auto |parallelcite=[2004] 1 [[Appeal Cases Law Reports|AC]] 158 |date=31 July 2003}}</ref>
* [[Mutual savings bank]]s and [[Investment company|investment corporation]]s/their depositors and [[investor]]s;
* [[Receiver (legal)|Receiver]]s, [[Trustee#Bankruptcy Trustee|trustees in bankruptcy]] and [[Assignment (law)|assignee]]s in [[insolvency]]/[[creditor]]s;
* Governments / [[indigenous peoples]]<ref>{{cite CanLII|litigants=R v Sparrow|link=R v Sparrow|year=1990|court=scc|num=104|format=canlii|pinpoint=|parallelcite=[1990] 1 SCR 1075|date=1990-05-31|courtname=auto|juris=}}</ref> (see e.g. ''[[Seminole Nation v. United States]]'');<ref>''[[Seminole Nation v. United States]]'', {{ussc|316|286|1942|format=j}}</ref>
* [[Physician|Doctor]]/[[patient]]—in Canada,<ref name="McInerney v MacDonald"/><ref>{{cite CanLII|litigants=Norberg v. Wynrib|link=Norberg v. Wynrib|year=1992|court=scc|num=65|format=canlii|pinpoint=|parallelcite=[1992] 2 SCR 226|date=1992-06-18|courtname=auto|juris=}}</ref> not in Australia;<ref name="186 CLR 71"/><ref>{{Citation|last=Dorsett|first=Griffith|date=1996|title=Comparing Apples and Oranges: The Fiduciary Principle in Australia and Canada after Breen v Williams|url=https://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1115&context=blr|access-date=2018-10-02|archive-date=2018-10-02|archive-url=https://web.archive.org/web/20181002102356/https://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1115&context=blr|url-status=dead}} (1996) 8(2) Bond Law Review 158.</ref>
* [[Legal guardian|Guardian]]/[[Ward (law)|ward]];<ref name="1998 FCA 1711">{{cite AustLII|FCA|1711|1998|litigants=Paramasivam v Flynn |courtname=auto |parallelcite=(1998) 
90 [[Federal Court Reports|FCR]] 489}}.</ref><ref>{{cite AustLII|SASC|285|2007|litigants=Trevorrow v State of South Australia (No 5) |courtname=auto}}.</ref>
* [[Teacher]]/[[student]];<ref>''Glover v Porter-Gaud'' (2000) 98-CP-10-613.</ref>
* [[Priest]]/[[parish]]ioner seeking [[counseling]].<ref>''Doe v Evans'', 814 So.2d 370 (Fla. 2002).</ref>

In Australia, the categories of fiduciary relationships are not closed.<ref name="156 CLR 41"/><ref name="207 CLR 165"/>

Roman and civil law recognized a type of contract called {{lang|la|fiducia}} (also {{lang|la|contractus fiduciae}} or fiduciary contract), involving essentially a sale to a person coupled with an agreement that the purchaser should sell the property back upon the fulfillment of certain conditions.<ref>{{cite book |url=https://archive.org/details/romanlawinmodern03sheruoft |first1=C. P. |last1=Sherman |title=Roman law in the modern world |publisher=New Haven Law Book |year=1922 |pages=[https://archive.org/details/romanlawinmodern03sheruoft/page/182 182]–83}}</ref> Such contracts were used in the emancipation of children, in connection with testamentary gifts and in pledges. Under Roman law a woman could arrange a fictitious sale called a ''fiduciary coemption'' in order to change her guardian or gain legal capacity to make a will.<ref>{{Cite book |url=http://thelatinlibrary.com/law/gaius1.html |title=Gai Institutiones, or, Institutes of Roman law |last1=Gaius |last2=Poste |first2=Edward |last3=Whittuck |first3=E. A |last4=Greenidge |first4=A. H. J. |last5=De Zulueta |first5=Francis |date=1904 |publisher=Clarendon Press |location=Oxford |language=en |archive-date=2019-11-14 |access-date=2019-01-30 |archive-url=https://web.archive.org/web/20191114141537/http://thelatinlibrary.com/law/gaius1.html |url-status=live }}</ref>

In [[Roman Dutch law]], a ''fiduciary heir'' may receive property subject to passing it to another on fulfilment of certain conditions; the gift is called a {{lang|la|fideicommissum}}. The fiduciary of a {{lang|la|fideicommissum}} is a ''fideicommissioner'' and one that receives property from a fiduciary heir is a ''fideicommissary heir''.<ref>{{cite web |url=http://www.ghostdigest.com/articles/what-is-a-fideicommissum/52218 |title=What is a fideicommissum? |website=LexisDigest |date=18 March 2004 |access-date=22 May 2017 |archive-date=18 May 2017 |archive-url=https://web.archive.org/web/20170518011759/http://www.ghostdigest.com/articles/what-is-a-fideicommissum/52218 |url-status=live }}</ref>

Fiduciary principles may be applied in a variety of legal contexts.<ref>{{cite journal |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1000278 |first1=Kenneth M. |last1=Rosen |title=Fiduciaries |volume=58 |journal=Alabama Law Review |issue=1041 |year=2007 |ssrn=1000278 |archive-date=2023-10-15 |access-date=2025-03-06 |archive-url=https://web.archive.org/web/20231015062957/https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1000278 |url-status=live }}</ref>

===Possible relationships===
[[Joint ventures]], as opposed to business [[partnerships]],<ref name="154 CLR 178"/> are not ''presumed'' to carry a fiduciary duty; however, this is a matter of degree.<ref name="157 CLR 1">{{cite AustLII|HCA|49|1985|litigants=United Dominions Corporation Ltd v Brian Pty Ltd |courtname=auto |parallelcite=(1985) 157 [[Commonwealth Law Reports|CLR]] 1}}</ref><ref>{{cite AustLII|HCA|21|2014|litigants=Howard v Commissioner of Taxation |courtname=auto |parallelcite=(2014) 253 [[Commonwealth Law Reports|CLR]] 83}}.</ref> If a joint venture is conducted at commercial arm's length and both parties are on an equal footing then the [[courts]] will be reluctant to find a fiduciary duty, but if the joint venture is carried out more in the manner of a partnership then fiduciary relationships can and often will arise.<ref name="230 CLR 89">{{cite AustLII|HCA|22|2007|litigants=Farah Constructions Pty Ltd v Say-Dee Pty Ltd |courtname=auto |parallelcite=(2007) 230 [[Commonwealth Law Reports|CLR]] 89}}.</ref><ref>{{cite BAILII|litigants=Arklow Investments Ltd and Another v. I.D. Maclean and Others |court=UKPC |year=1999 |num=51 |date=1 December 1999 |courtname=auto |juris=New Zealand}}</ref><ref name="157 CLR 1"/>

Husbands and wives are not ''presumed'' to be in a fiduciary relationship in many jurisdictions; however, this may be easily established. Similarly, ordinary commercial transactions in themselves are not ''presumed'' to but can give rise to fiduciary duties, should the appropriate circumstances arise. These are usually circumstances where the contract specifies a degree of trust and loyalty or it can be inferred by the court.<ref name="156 CLR 41"/><ref>{{cite AustLII|HCA|19|2010|litigants=John Alexander's Clubs Pty Ltd v White City Tennis Club |courtname=auto |parallelcite=(2010) 241 [[Commonwealth Law Reports|CLR]] 1}}.</ref>

Australian courts also do not recognise parents and their children to be in fiduciary relationships.<ref name="1998 FCA 1711"/><ref>{{cite journal |url=http://www.austlii.edu.au/au/journals/MonashULawRw/2002/11.html |last1=Joyce |first1=Richard |title=Fiduciary Law and Non-Economic Interests |journal=Monash University Law Review |year=2002 |archive-date=2017-05-16 |access-date=2017-05-22 |archive-url=https://web.archive.org/web/20170516112248/http://www.austlii.edu.au/au/journals/MonashULawRw/2002/11.html |url-status=live }} (2002) 28 [[Monash University Law Review]] 239.</ref><ref>{{cite web |url=http://www.supremecourt.wa.gov.au/_files/UNSW%20Conference%20of%20Fiduciary%20Law%2022%20Mar%202013%20Edelman%20J.pdf |title=The Importance of the Fiduciary Undertaking |date=2013 |first1=James |last1=Edelman |author-link1=James Edelman |access-date=2017-05-22 |archive-date=2017-05-16 |archive-url=https://web.archive.org/web/20170516144301/http://www.supremecourt.wa.gov.au/_files/UNSW%20Conference%20of%20Fiduciary%20Law%2022%20Mar%202013%20Edelman%20J.pdf |url-status=live }}</ref> In contrast, the Supreme Court of Canada allowed a child to sue her father for damages for breach of his fiduciary duties, opening the door in Canada for allowing fiduciary obligations between parent and child to be recognised.<ref>{{cite CanLII|litigants=M(K) v M(H) |courtname=auto |court=scc |year=1992 |num=31 |format=canlii |parallelcite=[https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/917/index.do [1992<nowiki>]</nowiki> 3 SCR 6]}}.</ref>

Australian courts have also not accepted doctor-patient relationships as fiduciary in nature. In ''Breen v Williams'',<ref name="186 CLR 71"/> the High Court viewed the doctor's responsibilities over their patients as lacking the representative capacity of the trustee in fiduciary relationships. Moreover, the existence of remedies in contract and tort made the Court reluctant in recognising the fiduciary relationship.

In 2011, in an insider trading case, the U.S. Securities and Exchange Commission brought charges against a boyfriend of a Disney intern, alleging he had a fiduciary duty to his girlfriend and breached it. The boyfriend, Toby Scammell, allegedly received and used insider information on Disney's takeover of Marvel Comics.<ref>{{Cite web|title=SEC charges Disney intern's boyfriend|url=http://www.ft.com/intl/cms/s/0/984f9ba8-c469-11e0-ad9a-00144feabdc0.html#axzz1UpmrJYCS|publisher=Financial Times|date=12 August 2011|access-date=12 August 2011}}</ref><ref>{{Cite web|title=SEC Charges Former Investment Fund Associate With Insider Trading|url=https://www.sec.gov/litigation/litreleases/2011/lr22066.htm|publisher=[[Securities and Exchange Commission]]|date=11 August 2011|access-date=12 August 2011}}</ref>

Generally, the employment relationship is not regarded as fiduciary, but may be so if

{{quote|... within a particular contractual relationship there are specific contractual obligations which the employee has undertaken which have placed him in a situation where equity imposes these rigorous duties in addition to the contractual obligations. Although terminologies like duty of good faith, or loyalty, or the mutual duty of trust and confidence are frequently used to describe employment relationships, such concepts usually denote situations where "a party merely has to take into consideration the interests of another, but does not have to act in the interests of that other.{{check quotation|date=March 2025}}<ref name="Fishel2000"/>}}

If fiduciary relationships are to arise between employers and employees, it is necessary to ascertain that the employee has placed himself in a position where he must act solely in the interests of his employer.<ref name="Fishel2000">{{cite BAILII|litigants= Nottingham University v Fishel |court=EWHC |division=QB |year=2000 |num=221 |courtname=auto |parallelcite=[2001] RPC 22 |date=19 January 2000}}</ref> In the case of ''[[Canadian Aero Service Ltd v O'Malley]]'',<ref>{{cite CanLII|litigants=Canadian Aero Service Ltd v O'Malley|link=Canadian Aero Service Ltd v O'Malley |year=1973 |court=scc |num=23 |format=canlii |parallelcite=[1974] SCR 592|date=1973-06-29 |courtname=auto}}</ref> it was held that a senior employee is much more likely to be found to owe fiduciary duties towards his employer.<!--

Don't make baseless assertions: A [[protector (trust)|protector]] of a [[trust law|trust]] may owe fiduciary duties to the [[beneficiary (trust)|beneficiaries]], although there is no [[case law]] establishing this to be the case.-->

In 2015, the [[United States Department of Labor]] issued a proposed rule that if finalized would extend the fiduciary duty relationship to investment advisors and some brokers including insurance brokers.<ref>{{cite web |url=http://www.pwc.com/us/en/financial-services/regulatory-services/publications/assets/dol-fiduciary-insurers-2015.pdf |title= Insurers: Retirement plans look less golden |website= pwc.com |publisher= PwC Financial Services Regulatory Practice| date=December 2015}}</ref> In 2017, the [[first Trump administration]] planned to order a 180-delay of implementation of the rule,<ref name=NYT01/> sometimes known as the 'fiduciary rule'.<ref>{{cite news |last1=Itzikoff |first1=Dave |url=https://www.nytimes.com/2017/02/07/arts/television/john-oliver-returns-im-not-a-complete-nihilist.html |title=John Oliver Returns: 'I'm Not a Complete Nihilist' |newspaper=The New York Times |date=February 7, 2017 |access-date=2017-02-07 |archive-date=2017-02-08 |archive-url=https://web.archive.org/web/20170208144431/https://www.nytimes.com/2017/02/07/arts/television/john-oliver-returns-im-not-a-complete-nihilist.html |url-status=live }}.</ref> The rule would require "brokers offering retirement investment advice to put their clients' interest first".<ref name=NYT01>{{cite news |url=https://www.reuters.com/article/us-usa-trump-banks-fiduciary-idUSKBN15I2J2 |title=Trump to Order 180-Day Delay of Labor Dept 'Fiduciary' Rule |newspaper=Reuters |date=February 3, 2017 |access-date=2017-02-07}}</ref>  The Trump administration later rescinded the fiduciary rule on July 20, 2018.<ref>{{cite web|url=https://www.forbes.com/sites/brianmenickella/2018/07/20/the-dols-fiduciary-rule-funeral-means-trust-is-dead/#3a3370543230|title=The DOL's Fiduciary Rule Funeral Means Trust Is Dead|first=Brian|last=Menickella|website=Forbes}}</ref><ref>{{cite web|url=https://economics21.org/html/trump-administration-ends-flawed-and-costly-labor-rule-3266.html|title=Trump Administration Ends Flawed and Costly Labor Rule|date=24 July 2018|website=Economics21|access-date=10 August 2018|archive-date=10 August 2018|archive-url=https://web.archive.org/web/20180810235616/https://economics21.org/html/trump-administration-ends-flawed-and-costly-labor-rule-3266.html|url-status=live}}</ref> Prior to its repeal, the rule was also dealt blows by the [[US Fifth Circuit Court of Appeals]] in March and June 2018.<ref>{{cite web|url=http://www.investmentnews.com/article/20180621/FREE/180629985/its-official-dol-fiduciary-rule-is-dead|title=It's official: DOL fiduciary rule is dead|first=Mark Jr.|last=Schoeff|website=InvestmentNews|date=21 June 2018}}</ref>

===Examples===
For example, two members, ''X'' and ''Y'', of a band currently under contract with one another (or with some other tangible, existing relationship that creates a legal duty) record songs together. Let us imagine it is a serious, successful band and that a court would declare that the two members are equal partners in a business. One day, ''X'' takes some demos made cooperatively by the duo to a recording label, where an executive expresses interest. ''X'' pretends it is all his work and receives an exclusive [[contract]] and $50,000. ''Y'' is unaware of the encounter until reading it in the paper the next week.

This situation represents a conflict of interest and duty. Both ''X ''and ''Y'' hold fiduciary duties to each other, which means they must subdue their own interests in favor of the duo's collective interest. By signing an individual contract and taking all the money, ''X'' has put personal interest above the fiduciary duty. Therefore, a court will find that ''X'' has breached his fiduciary duty. The [[judicial remedy]] here will be that ''X'' holds both the contract and the money in a [[constructive trust]] for the duo. Note, ''X'' will not be punished or totally denied of the benefit; both ''X'' and ''Y'' will receive a half share in the contract and the money.

When [[T. Boone Pickens]]'s [[Mesa Petroleum]] attempted to take over [[Cities Service]] in 1982, Cities Service attempted to take over the smaller Mesa instead. Pickens was friends with Alan Habacht of [[Weiss, Peck  & Greer]], who supported Mesa's attempt. Fiduciary duty, however, required Habacht to seek the maximum possible return on the investment he managed by offering Weiss's Mesa shares to Cities's [[tender offer]].<ref name="nocera198210">{{Cite magazine |last=Nocera |first=Joseph |date=October 1982 |title='It's Time To Make a Deal' |url=https://www.texasmonthly.com/news-politics/its-time-to-make-a-deal/ |access-date=2024-05-22 |magazine=Texas Monthly |language=en |archive-date=2024-05-22 |archive-url=https://web.archive.org/web/20240522115934/https://www.texasmonthly.com/news-politics/its-time-to-make-a-deal/ |url-status=live }}</ref>

==Elements of duty==
A fiduciary, such as the administrator, [[executor]] or guardian of an estate, may be legally required to file with a probate court or judge a [[surety bond]], called a '''fiduciary bond''' or '''probate bond''', to guarantee faithful performance of his duties.<ref>[http://definitions.uslegal.com/f/fiduciary-bond Fiduciary Bond Law & Legal Definition.] {{Webarchive|url=https://web.archive.org/web/20080720155420/http://definitions.uslegal.com/f/fiduciary-bond/ |date=2008-07-20 }} Legal Definitions Legal Terms Dictionary.</ref> One of those duties may be to prepare, generally under oath, an ''inventory'' of the tangible or intangible property of the estate, describing the items or classes of property and usually placing a valuation on them.<ref>{{cite web |url=http://www.guertinandguertin.com/choosing_right_fiduciary.php |author=Guertin & Guertin, LLC |title=Choosing the Right Fiduciary |access-date=2008-07-18 |archive-date=2008-11-20 |archive-url=https://web.archive.org/web/20081120140440/http://www.guertinandguertin.com/choosing_right_fiduciary.php |url-status=dead }}</ref>

A bank or other fiduciary having legal title to a mortgage may sell fractional shares to investors, thereby creating a ''[[participating mortgage]]''.

== Accountability ==
A fiduciary will be liable to account if proven to have acquired a profit, benefit or gain from the relationship by one of three means:{{ref|chan2}}

* In circumstances of conflict of duty and interest;<ref name="188 CLR 449"/>
* In circumstances of conflict of duty to one person and duty to another person;
* By taking advantage of the fiduciary position.<ref name="ASIC v Citigroup"/>

Therefore, it is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and not to profit from his fiduciary position without express knowledge and consent. A fiduciary cannot have a [[conflict of interest]].

The state of Texas in the United States sets out the duties of a fiduciary in its Estates Code, chapter 751, as follows (the bracketed references to TPC refer to the Texas Probate Code superseded by the Estates Code, effective January 1, 2014):

;Sec. 751.101. Fiduciary Duties. [TPC §489B(a)]
:An attorney in fact or agent is a fiduciary and has a duty to inform and to account for actions taken under the power of attorney.
;Sec. 751.102. Duty to Timely Inform Principal. [TPC §489B(b)]
:(a) The attorney in fact or agent shall timely inform the principal of each action taken under the power of attorney.
:(b) Failure of an attorney in fact or agent to timely inform, as to third parties, does not invalidate any action of the attorney in fact or agent.
;Sec. 751.103. Maintenance of Records. [TPC §489B(c), (f)]
:(a) The attorney in fact or agent shall maintain records of each action taken or decision made by the attorney in fact or agent.
:(b) The attorney in fact or agent shall maintain all records until delivered to the principal, released by the principal, or discharged by a court.
;Sec. 751.104. Accounting. [TPC §489B(d), (e)]
:(a) The principal may demand an accounting by the attorney in fact or agent.
:(b) Unless otherwise directed by the principal, an accounting under Subsection (a) must include:{{ubl|item_style=margin-left: 1.5em|(1) the property belonging to the principal that has come to the attorney in fact's or agent's knowledge or into the attorney in fact's or agent's possession;|(2) each action taken or decision made by the attorney in fact or agent;|(3) a complete account of receipts, disbursements, and other actions of the attorney in fact or agent that includes the source and nature of each receipt, disbursement, or action, with receipts of principal and income shown separately;|(4) a listing of all property over which the attorney in fact or agent has exercised control that includes:{{ubl|item_style=margin-left: 1.5em|(A) an adequate description of each asset; and|(B) the asset’s current value, if the value is known to the attorney in fact or agent;}}|(5) the cash balance on hand and the name and location of the depository at which the cash balance is kept;|(6) each known liability; and|(7) any other information and facts known to the attorney in fact or agent as necessary for a full and definite understanding of the exact condition of the property belonging to the principal.}}
:(c) Unless directed otherwise by the principal, the attorney in fact or agent shall also provide to the principal all documentation regarding the principal’s property.

=== Conflict of duties ===
A fiduciary's duty must not conflict with another fiduciary duty.<ref name="Boardman v Phipps"/><ref name="154 CLR 178"/><ref>{{cite NZLII |litigants=Farrington v Rowe McBride & Partners |court=NZCA |year=1985 |num=21 |parallelcite=[1985] 1 [[New Zealand Law Reports|NZLR]] 83 |courtname=auto}}.</ref> Conflicts between one fiduciary duty and another fiduciary duty arise most often when a [[lawyer]] or an [[Agent (law)|agent]], such as a [[real estate agent]], represent more than one client, and the interests of those clients conflict.<ref name="1991 FCA 73"/> This would occur when a lawyer attempts to represent both the [[plaintiff]] and the [[defendant]] in the same matter, for example. The rule comes from the [[logical]] conclusion that a fiduciary cannot make the principal's interests a top priority if he has two principals and their interests are diametrically opposed; he must balance the interests, which is not acceptable to equity. Therefore, the conflict of duty and duty rule is really an extension of the conflict of interest and duty rules.

=== No-profit rule ===
A fiduciary must not profit from the fiduciary position.<ref name="Keech v Sandford"/><ref name="Daly v SSE"/><ref name="154 CLR 178"/><ref name="156 CLR 41"/> This includes any benefits or [[Profit (accounting)|profits]] which, although unrelated to the fiduciary position, came about because of an opportunity that the fiduciary position afforded.<ref name="154 CLR 178"/><ref>{{cite AustLII|HCA|8|1975|litigants=Consul Development Pty Ltd v DPC Estates Pty Ltd |courtname=auto |parallelcite=(1975) 132 [[Commonwealth Law Reports|CLR]] 373}}.</ref> It is unnecessary that the principal would have been unable to make the profit; if the fiduciary makes a profit, by virtue of his role as fiduciary for the principal, then the fiduciary must report the profit to the principal. If the principal provides fully [[informed consent]], then the fiduciary may keep the benefit and be absolved of any liability for what would be a breach of fiduciary duty.<ref name="ASIC v Citigroup"/><ref name="2012 FCA 1028"/><ref name="188 CLR 449"/> If this requirement is not met then the property is deemed by the court to be held by the fiduciary on constructive trust for the principal.<ref name="Boardman v Phipps"/>

Secret commissions, or [[bribes]], also come under the no profit rule.<ref>{{cite AustLII|FCAFC|6|2012|litigants=Grimaldi v Chameleon Mining NL (No 2) |courtname=auto}}.</ref> The bribe shall be held in constructive trust for the principal. The person who made the bribe cannot recover it, since he has committed a [[crime]]. Similarly, the fiduciary, who received the bribe, has committed a crime. Fiduciary duties are an aspect of equity and, in accordance with the equitable principles, or maxims, equity serves those with clean hands. Therefore, the bribe is held on constructive trust for the principal, the only innocent party.

Bribes were initially considered not to be held on constructive trust, but were considered to be held as a [[debt]] by the fiduciary to the principal.<ref>''[[Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd#High Court|Lister v Stubbs]]'' (1890) 45 Ch D 1, [[High Court of Justice|High Court]] (England and Wales).</ref> This approach has been overruled; the bribe is now classified as a constructive trust.<ref>{{cite BAILII|litigants=The Attorney General of Hong Kong v Reid |link=Attorney General for Hong Kong v Reid |court=UKPC |year=1993 |num=36 |format=1 |date=1 November 1993 |courtname=auto |juris=New Zealand}}</ref> The change is due to pragmatic reasons, especially in regard to a [[bankrupt]] fiduciary. If a fiduciary takes a bribe and that bribe is considered a debt then if the fiduciary goes bankrupt the debt will be left in his pool of assets to be paid to [[creditors]] and the principal may miss out on recovery because other creditors were more secured. If the bribe is treated as held on a constructive trust then it will remain in the possession of the fiduciary, despite bankruptcy, until such time as the principal recovers it.

=== Avoiding these accountabilities ===
The landmark Australian decision ''ASIC v Citigroup'' noted that the "informed consent" on behalf of the beneficiary to breaches of either the no-profit and no-conflict rule will allow the fiduciary to get around these rules.<ref name="ASIC v Citigroup"/><ref name="230 CLR 89"/> Furthermore, it highlighted that a contract may include a clause that allows individuals to avoid all fiduciary obligations within the course of dealings, and thereby continue to make a personal profit or deal with other parties- tasks that may otherwise have been in conflict with what would have been a fiduciary duty had it not been for this clause.<ref name="ASIC v Citigroup"/> In the Australian case of ''Farah Constructions Pty Ltd v Say-Dee Pty Ltd'', however, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ observed that the sufficiency of disclosure may depend on the sophistication and intelligence of the persons to whom the disclosure must be made.<ref name="230 CLR 89"/>

However, in the English case of ''Armitage v Nurse'' an exception was noted to be the fiduciary's obligation of good faith;<ref>{{cite BAILII |litigants=Armitage v Nurse |link=Armitage v Nurse |court=EWCA |division=Civ |year=1997 |num=1279 |parallelcite= [1998] Ch 241 at 253-4 per [[Peter Millett, Baron Millett|Millett LJ]] |courtname=auto}}.</ref> liability for breach of fiduciary duty by way of fraud or dishonesty cannot be avoided through an exclusion clause in a contract. The decision in ''Armitage v Nurse'' has been applied in Australian .<ref>{{cite AustLII|VSC|180|1998|litigants=Reader v Fried |courtname=auto}}.</ref>

== Breaches of duty and remedies ==<!-- This section is linked from [[Moshe Katsav]] -->
Conduct by a fiduciary may be deemed ''[[constructive fraud]]'' when it is based on acts, omissions or concealments considered fraudulent and that gives one an advantage against the other because such conduct—though not actually fraudulent, dishonest or deceitful—demands redress for reasons of public policy.<ref>{{cite web |url=http://www.wolframlawfirm.com/WLFfiduc.html |title=Brief on fiduciary duty |author=Wolfram Law Firm, P.C. |url-status=dead |archive-url=https://web.archive.org/web/20080720023718/http://www.wolframlawfirm.com/WLFfiduc.html |archive-date=2008-07-20 }}</ref> Breach of fiduciary duty may occur in [[insider trading]], when an insider or a related party makes trades in a corporation's securities based on material non-public information obtained during the performance of the insider's duties at the corporation. Breach of fiduciary duty by a lawyer with regard to a client, if negligent, may be a form of [[legal malpractice]]; if intentional, it may be remedied in equity.<ref>''Clark v Rowe'', 428 Mass. 339, 345 (1998) (dicta).</ref><ref>{{cite AustLII|VSC|464|2014|litigants=Australian Super Developments Pty Ltd v Marriner |courtname=auto }}.</ref>
 
Where a principal can establish both a fiduciary duty and a breach of that duty, through violation of the above rules, the court will find that the benefit gained by the fiduciary should be returned to the principal because it would be [[unconscionable]] to allow the fiduciary to retain the benefit by employing his strict common law legal [[rights]]. This will be the case, unless the fiduciary can show there was full disclosure of the conflict of interest or profit and that the principal fully accepted and freely consented to the fiduciary's course of action.<ref name="230 CLR 89"/>

Remedies will differ according to the type of damage or benefit. They are usually distinguished between proprietary remedies, dealing with property, and personal remedies, dealing with pecuniary (monetary) compensation. Where concurrent contractual and fiduciary relationships exist, remedies available to the plaintiff beneficiary is dependent upon the duty of care owed by the defendant and the specific breach of duty allowing for remedy/damages. The courts will clearly distinguish the relationship and determine the nature in which the breach occurred.<ref>{{cite AustLII|HCA|9|1997|litigants=Hill v Van Erp |courtname=auto |parallelcite=(1997) 188 [[Commonwealth Law Reports|CLR]] 159}}.</ref>

=== Constructive trusts ===
Where the unconscionable gain by the fiduciary is in an easily identifiable form, such as the recording contract discussed above, the usual remedy will be the already discussed constructive trust.<ref>{{cite AustLII|litigants=Giumelli v Giumelli|link=|court=HCA|num=10|year=1999|pinpoint=|parallelcite=196 [[Commonwealth Law Reports|CLR]] 101 |courtname=auto}}.</ref>

Constructive trusts pop up in many aspects of equity, not just in a remedial sense,<ref>{{cite AustLII|HCA|78|1985|litigants=Muschinski v Dodds |courtname=auto |parallelcite=160 [[Commonwealth Law Reports|CLR]] 583}}.</ref> but, in this sense, what is meant by a constructive trust is that the court has created and imposed a duty on the fiduciary to hold the money in safekeeping until it can be rightfully transferred to the principal.<ref name="154 CLR 178"/><ref>{{cite WorldLII |court=EngR |year=1810 |num=194 |litigants=Featherstonhaugh v Fenwick |juris=[[Court of Chancery]] (England and Wales)}}.</ref>

=== Account of profits ===
An [[account of profits]] is another potential remedy.<ref>{{cite AustLII|litigants=Dart Industries Inc v Decor Corporation Pty Ltd ("Lettuce Crisper case")|link=|court=HCA|num=54|year=1993|pinpoint=|parallelcite=(1993) 179 [[Commonwealth Law Reports|CLR]] 101 |courtname=auto}}.</ref> It is usually used where the breach of duty was ongoing or when the gain is hard to identify. The idea of an account of profits is that the fiduciary profited unconscionably by virtue of the fiduciary position, so any profit made should be transferred to the principal. It may sound like a constructive trust at first, but it is not.

An account of profits is the appropriate remedy when, for example, a senior [[employee]] has taken advantage of his fiduciary position by conducting his own [[company]] on the side and has run up quite a lot of profits over a period of time, profits which he wouldn't have been able to make otherwise. The fiduciary in breach may however receive an allowance for effort and ingenuity expended in making the profit.

=== Compensatory damages ===
[[Compensatory damages]] are also available.<ref>''[[Nocton v Lord Ashburton]]'' [http://swarb.co.uk/nocton-v-lord-ashburton-hl-1914/ <nowiki>[1914]</nowiki> AC 932] {{Webarchive|url=https://web.archive.org/web/20170824164855/http://swarb.co.uk/nocton-v-lord-ashburton-hl-1914/ |date=2017-08-24 }} [[Judicial functions of the House of Lords|House of Lords]] (United Kingdom)</ref> Accounts of profits can be hard remedies to establish, therefore, a plaintiff will often seek compensation (damages) instead. Courts of equity initially had no power to award compensatory damages, which traditionally were a remedy at common law, but legislation and case law has changed the situation so compensatory damages may now be awarded for a purely equitable action.

== Fiduciary duty and pension governance ==
Some experts have argued that, in the context of pension governance, [[trustee]]s have started to reassert their fiduciary prerogatives more strongly after 2008 – notably following the heavy losses or reduced returns incurred by many retirement schemes in the wake of the [[Great Recession]] and the progression of [[Environmental, social and corporate governance|ESG and Responsible Investment]] ideas: "Clearly, there is a mounting demand for CEOs (equity issuers) and governments (sovereign bond issuers) to be more 'accountable' ... No longer ‘[[absentee landlord]]s', trustees have started to exercise more forcefully their governance prerogatives across the boardrooms of Britain, Benelux and America: coming together through the establishment of engaged pressure groups."<ref name="Analyse Financière">{{cite news |first1=M. Nicolas J. |last1=Firzli |title=Beyond SDGs: Can Fiduciary Capitalism and Bolder, Better Boards Jumpstart Economic Growth? |url=https://www.academia.edu/28982570 |access-date=1 November 2016 |work=Analyse Financière |date=October 2016 |archive-date=30 December 2020 |archive-url=https://web.archive.org/web/20201230063938/https://www.academia.edu/28982570/Beyond_SDGs_Can_Fiduciary_Capitalism_and_Bolder_Better_Boards_Jumpstart_Economic_Growth |url-status=live }}</ref> However, in the United States, there are questions whether a pension's decision to consider factors such as how investments impact contributors' continued employment violate a fiduciary duty to maximize the retirement fund's returns.<ref>{{cite journal |last1=Webber |first1=David H. |author-link=David H. Webber |title=The Use and Abuse of Labor's Capital |journal=New York University Law Review |date=December 2014 |volume=89 |page=2110 |url=https://scholarship.law.bu.edu/cgi/viewcontent.cgi?article=1033&context=faculty_scholarship |access-date=20 November 2019}}</ref>

[[Pension fund]]s and other large [[institutional investor]]s are increasingly making their voices heard to call out irresponsible practices in the businesses in which they invest <ref>{{cite journal |first1=Louise |last1=Farrand  |url=http://www.pensionsage.com/pa/images/activism_Nov2016.pdf |title=Pension Funds Investing in Change |journal=Pensions Age |date=December 2016}}</ref>

The Fiduciary Duty in the 21st Century Programme, led by the [[United Nations Environment Programme Finance Initiative]], the [[Principles for Responsible Investment]], and the Generation Foundation, aims to end the debate on whether fiduciary duty is a legitimate barrier to the integration of environmental, social and governance (ESG) issues in investment practice and decision-making.<ref name=":1">PRI, UNEP FI, & The Generation Foundation. [https://www.fiduciaryduty21.org/ Fiduciary Duty in the 21st Century] {{Webarchive|url=https://web.archive.org/web/20180220151920/https://www.fiduciaryduty21.org/ |date=2018-02-20 }}. 2018</ref> This followed the 2015 publication of "Fiduciary Duty in the 21st Century" which concluded that "failing to consider all long-term investment value drivers, including ESG issues, is a failure of fiduciary duty".<ref>UNEP FI, the PRI, UNEP Inquiry, & UN Global Compact. {{cite web |url=https://www.unpri.org/download_report/6131 |title=Fiduciary Duty in the 21st Century 2015 report |access-date=2018-02-19 |archive-date=2017-08-28 |archive-url=https://web.archive.org/web/20170828123034/https://www.unpri.org/download_report/6131 |url-status=dead }}[[File:Fileicon-pdf.png]] (PDF).</ref> Founded on the realization that there is a general lack of legal clarity globally about the relationship between sustainability and investors’ fiduciary duty, the programme engaged with and interviewed over 400 policymakers and investors to raise awareness of the importance of ESG issues to the fiduciary duties of investors. The programme also published roadmaps which set out recommendations to fully embed the consideration of ESG factors in the fiduciary duties of investors across more than eight capital markets.<ref name=":1" /> Drawing upon findings from Fiduciary Duty in the 21st Century, the European Commission High-Level Expert Group (HLEG) recommended in its 2018 final report that the EU Commission clarify investor duties to better embrace long-term horizon and sustainability preferences.<ref>[https://ec.europa.eu/info/sites/info/files/180131-sustainable-finance-final-report_en.pdf "Final Report 2018 by the High-Level Expert Group on Sustainable Finance"] (PDF). 31 January 2018.</ref>

==See also==
* [[Trustee]]
*[[Directors' duties]]
*[[Compensatory damages]]
*[[Constructive trust]]
*[[Corporate opportunity]]
*[[Court of equity]]
*[[Equitable remedy]]
*[[Escrow]]
*''[[Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.]]''
*[[Self-dealing]]
*[[Trust (law)]]
*[[Uniform Prudent Investor Act]]
*''[[Attorney General v Blake]]'', concerning the extension of fiduciary like remedies to a breach of contract context

==References==
{{reflist|30em}}

==Further reading==

*[[P Birks]], ‘The Content of Fiduciary Obligation’ (2000) 34 Israel Law Journal 3; (2002) 16 Trust Law International 34
*M Conaglen, ‘The Nature and Function of Fiduciary Loyalty’ (2005) 121 Law Quarterly Review 452–480.
*[[JH Langbein]] ‘Questioning the Trust Law Duty of Loyalty’ (2005) 114 Yale Law Journal 929–990.
*A Hicks, ‘The Trustee Act 2000 and the Modern Meaning of ''Investment''’ (2001) 15 (4) Trust Law International 203
*DA De Mott, 'Beyond Metaphor: An Analysis of Fiduciary Obligation' (1988) 5 Duke Law Journal 879.
*PD Finn, 'The Fiduciary Principle' in TG Youdan (ed) 'Equity, Fiduciaries and Trusts' (1989) Carswell.
*MN Firzli, ‘Beyond SDGs: Can Fiduciary Capitalism and Bolder, Better Boards Jumpstart Economic Growth?’ (2016) 61 Revue Analyse Financière 65–67.
*T Frankel, 'Fiduciary Law' (1983) California Law Review 795.
*DR Paling ‘Trustees Duties of Skill and Care’ (1973) 37 Conveyancer 48–59
*EJ Weinrib, ‘The Fiduciary Obligation’ (1975) 25(1) University of Toronto Law Journal 1–22
*LI Rotman "Fiduciary Law's 'Holy Grail': Reconciling Theory and Practice in Fiduciary Jurisprudence" (2011) 91 Boston University Law Review 921–971.
*LI Rotman "Fiduciary Doctrine: A Concept in Need of Understanding" (1996) 34 Alberta Law Review 821–852.
*Bryan, M.W and V.J Vann ''Equity & Trusts in Australia'' (Cambridge University Press, 2nd ed, 2013)ch 10.

The following books cover the field in detail:
*Chodos, Rafael, 'The Law of Fiduciary Duties' (2001) Blackthorne Legal Press
*Finn, P.D., 'Fiduciary Obligations' (1977) The Law Book Co
*Frankel, Tamar, 'Fiduciary Law' (2008) Fathom Publishing Company 
*Frankel, Tamar, 'Legal Duries of Fiduciaries' (2012) Fathom Publishing Company
*Frankel, Tamar, 'Fiduciary Law' (2010) Oxford University Press {{ISBN|978-0195391565}}.
*Rotman, Leonard I., 'Fiduciary Law' (2005) Thomson/Carswell {{ISBN|0-459-24249-0}}.

==External links==
*Iman Anabtawi and [[Lynn A. Stout]], [https://ssrn.com/abstract=1089606 "Fiduciary Duties for Activist Shareholders". UCLA School of Law, Law-Econ Research Paper No. 08-02.] Social Science Research Network (SSRN) Electronic Library.
*[https://web.archive.org/web/20040603062416/http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html Meeting Your Fiduciary Responsibilities.] The U.S. Department of Labor: Employee Benefits Security Administration.
*[http://cyber.law.harvard.edu/trusting/unit5all.html Excerpts from texts on fiduciary duties.] ''The New Palgrave Dictionary of Economics and the Law'', Definition of "fiduciary duties", by Tamar Frankel; "Fiduciary Law", by Tamar Frankel, ''California Law Review'', May 1983, 71 Ca. L. Rev. 795; "Fiduciary Duties as Default Rules", by Tamar Frankel, ''Oregon Law Review'', Winter 1995, 74 Or. L. Rev. 1209; "Contract and Fiduciary Duty", by Frank H. Easterbrook and Daniel R. Fischel, ''The Journal of Law and Economics'', 1993, 36 J.L. & Econ. 425; etc. Berkman Center, Harvard Law School: Trust and Non-Trust in Law, Business, and Behavioral Science.
*{{Cite EB1911|wstitle=Fiduciary}}

[[Category:Common law]]
[[Category:Equity (law)]]
[[Category:Legal professions]]