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What is breach of fiduciary duty?

There are certain business terms that might be confusing even to those who are involved and work in business as their means of making a living. Knowing these various terms is essential for New Jersians who are starting a business or running a business. One is breach of fiduciary duty. Fiduciary duty is when a party is obligated to act in the interests of another party. Breaking that code will be a breach of fiduciary duty. One party trusting another with a certain duty creates a fiduciary on the part of the one who is being trusted. There are several different ways in which fiduciary duty can be breached.

First, the breach of fiduciary duty will often hinge on if there was a fiduciary relationship when the dispute took place. Next, the relationship and duties of the fiduciary must be considered. Third, the duties that were breached during the relationship will need to be examined. An example of a breach might be if the fiduciary does not act in the interest of the clients, but in his or her own interests. It can also be a failure to provide certain necessary information such as there being a conflict of interest.

There are three elements to a claim alleging breach of fiduciary duty. They are duty, breach and damages. With duty, the fiduciary was obligated to the other party to provide full disclosure, to deal in good faith, or to have loyalty. A breach means that the duty was violated by not disclosing necessary information, misappropriating funds, misusing a position, not living up to responsibilities, or misrepresenting facts. The party that claims to have been harmed is required to have suffered damages with the breach having been a proximate cause of it. If there are no damages, there can be no breach of fiduciary duty.

Those who are in the middle of a business dispute based on an allegation of a breach of fiduciary duty must have all the evidence of the behavior and be able to show that it caused damages. Speaking to a lawyer who is experienced in business cases with fiduciary duty issues can help to pursue business litigation.

Source:, "Breach of Fiduciary Duty," accessed on Aug. 15, 2017

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