Main Page | See live article | Alphabetical index

Fiduciary duty

Fiduciary duty is one of the duties that corporate directors and officers have towards a corporation, as well as the duties that partners have to a partnership and trustees have to a trust.

Broadly speaking, fiduciary duties can be grouped into three categories:

A variety of other duties, and legal doctrines, are subsumed in these three duties. For example, the duty of care includes a duty of confidentiality, i.e. that the fiduciary will not disclose the beneficiary's information. The duty of loyalty includes the corporate opportunity doctrine. Fiduciary duties take into account the nature of the relationship in which they are formed, and, in some circumstances (such as in limited liability companies) may be modified by contract.

Also related is the Business Judgement Rule which provides that the decisions of a corporation's board of directors will not be second-guessed unless a decision is self-interested (a violation of the duty of loyalty) or (more rarely) the board acted in an imprudent manner (a violation of the duty of care).