Breach of fiduciary duty is a term that is often used in business, but not all business owners are aware of what it means. A fiduciary duty means that one party has an obligation to act in the best interest of another party. If he or she acts in a way that is contrary to that duty, it is called a breach of fiduciary duty.
A breach of fiduciary duty is a business tort, which is a wrongful act against a business entity that causes financial loss. A party who breaches his or her fiduciary duty may face legal consequences.
Elements
In general, in order to prove that there was a breach of fiduciary duty there are several elements that must be demonstrated to the court.
There must have been a fiduciary relationship at the time of the dispute, meaning that the defendant had a duty to the plaintiff. This could include the duty of good faith and fair dealing, the duty of full disclosure and the duty of loyalty.
Next, the defendant must have breached this duty. Examples of this might include acting in their own interest instead of the business’s interest, misappropriating money or property, neglecting their responsibilities or misusing their position.
Finally, the plaintiff must prove that damages resulted from the breach of fiduciary duty. Usually, if the plaintiff can prove these elements, he or she can recover for those damages.
The outcome of the dispute will depend on the individual circumstances of the situation and on the relationships involved. An experienced attorney can help businesses with breach of fiduciary duty claims and other business matters.