Thus, for example, if a fiduciary is selling real estate to the cestui que trust, the fiduciary is obligated to volunteer all the relevant facts. Failure to do so gives rise to a fraud claim. But in a fiduciary relation, the fiduciary is required to disclose relevant facts. That is, in an arms-length relationship, neither party is required to volunteer facts. The existence of a fiduciary relationship imposes on the fiduciary a duty to volunteer relevant facts. Under New York law, the injured party may sue a relatively peripheral figure that induced the breach, who may have the resources to pay a judgment. This may be helpful if the fiduciary is judgment proof- i.e., without the assets to pay a large judgment. Under New York law, a person who induces a breach of fiduciary duty is also liable. So, let's suppose the majority shareholder refuses to declare a dividend to force the minority shareholder to sell his interest, that could be a breach of fiduciary duty.īut it isn't just the fiduciary who's liable. In addition, the majority shareholder has a fiduciary duty to the minority shareholder. If the officers and directors waste corporate assets, that's a breach of fiduciary duty that may subject them to liability.

The officers and directors of corporations bear a fiduciary responsibility to the corporation and to its shareholders. Similarly, if the manager of a pension fund permits an investment advisor to manage the fund in return for a bribe, that's a breach of fiduciary duty. For example, if the trustee managing investments in a trust diverts a valuable opportunity away from the trust and into his own business, that's a form of self-dealing. One form of a breach of fiduciary duty is called self-dealing, where the fiduciary does something to help himself at the expense of the other party. Violating any of those duties may subject the fiduciary to a law suit. The three forms of fiduciary duties are a duty of care, a duty of loyalty and a duty of honesty. For example a fiduciary duty may arise between a bank and its customer where the bank assumes control and responsibility over the customer's assets and operations, or where the customer places special trust and confidence in the bank and becomes dependent on it. For example, when one party's superior position or superior access to confidential information is so great as to virtually require the other party to repose trust and confidence in the first party. Some common place business relationships may have special factors that give rise to a fiduciary duty. (The person that reposes trust in the fiduciary is called the cestui que trust.) Such relationships include the relationship that a lawyer has with his client, a director of a corporation has with the shareholders, partners have with each other, an agent has with his principal, and an accountant has with his customer. Some relationships are so close and trusting that the law imposes special obligations on the persons being trusted, who are called fiduciaries.

Breach of fiduciary duty