Breach of Fiduciary Duty

Breach of Fiduciary Duty Laws

A fiduciary duty is a special duty that exists whereby the fiduciary must act in the best interests of another individual and is one of the highest standards imposed by law.

Creation of a Fiduciary Duty

A fiduciary duty is created either:

  • Through a contract establishing that duty
  • By the very nature of the relationship, as for instance an attorney-client relationship, director of a company, trustee of a trust

In either case, the subject individual relies on the fiduciary to exercise discretion and often specific knowledge or expertise on his or her behalf, and exercise skill, care and diligence in all relevant activities.

A Fiduciary’s Standards

Once the fiduciary accepts the role, he or she cannot act in any manner contrary to the best interest of the subject and cannot obtain any personal benefit as a result of the relationship with the subject. Importantly, even in instances where a subject may suffer no harm, if the fiduciary derives a benefit from the relationship, the fiduciary may be liable for a breach of fiduciary duty.

A Breach

Common issues involved in breaches include:

  • Breach of reasonable care
  • Breach of the duty of loyalty
  • Breach of the duty of confidentiality


Breach of fiduciary duty is a civil action and monetary compensation may be available where the fiduciary profited from the breach. In such circumstances, the law imposes a constructive trust, which effectively safeguards the gain until such time as it can be transferred back to the subject individual.