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Breach Of Fiduciary
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Breach Of Fiduciary Duty
Have you placed trust and confidence in another to act in your best interest? Has that designated person failed to exercise due care and diligence in executing his or her duties? If yes, they may have breached a fiduciary duty to you, and you may have a claim against them to recover any losses due to their lack of due care.
Unfortunately, there are times when one business partner might actually work against the other’s best interests and might even end up causing some level of financial devastation in the process. If you’ve trusted someone to act in your best interests and they’ve agreed, then they might have a fiduciary obligation to you. Those who violate that obligation might be at risk of providing the other party with the necessary grounds for a breach of fiduciary duty complaint.
Definition Of Fiduciary Duty
When a party places their trust in another party who fully acknowledges and accepts said responsibility, the groundwork is laid for a fiduciary relationship. In order to be legally binding, this relationship has to be laid out via a contract or some other existing law. There’s also the possibility of establishing a relationship that’s legally demonstrated to be fiduciary in nature. For example, an attorney serving a client is by definition a fiduciary relationship.
A fiduciary relationship arises in a number of formal and informal contexts. In such a relationship, good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who has trusted them. A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances that give rise to a relationship of trust and confidence.
Establishing A Fiduciary Obligation
Before a fiduciary duty exists, the relationship must be defined.. Legally, this relationship must be created via a contract or existing law, or through the establishment of a relationship that has been legally demonstrated to be fiduciary in nature. For the latter, for example, the relationship between an attorney, and their client is by definition fiduciary.
Fiduciary relationships emerge in a number of relationships, including:
- Business partnership
- Corporate officer/shareholder
What Defines A Breach Of Fiduciary Duty
People are able to breach their fiduciary duty in a number of ways that largely depend on the type of relationship being examined. Generally, a breach will happen when a trusted party acts against the best interests of their client or acts in their own interest.
An attorney who strikes a deal in their own best interest would breach this duty. Someone who is serving as the CEO of a company might buy out a friend’s failing company, which hurts their own shareholders. This would be another breach. In order to establish that a breach has indeed occurred, you need to establish several things:
- A fiduciary duty existed, to begin with
- The other party did indeed breach it
- Proof of the fact that you suffered damages as a result of said breach
Once it’s been established that a breach occurred, the court must determine how much the violated party deserves in damages. Everything comes down to the financial damages you suffer as a result of the breach. If a CEO’s decision to buy a failing business costs shareholders $100,000, they may sue for that amount of money. If an accountant’s breach of duty costs a client $2,000 in late tax fees and penalties, the client may try to recover $2,000 in court.
Miami Breach Of Fiduciary Duty
If the individual in question acted in a way that wasn’t in your best interest, then they would have violated that trust in spite of the fact that you were dealing with a more casual sort of relationship. This is especially true of anyone who might have found that a significant amount of money or other tangible property was involved in the transaction.
Breach Of Fiduciary Assistance From Trembly Law Firm
Fortunately, there’s help available from Trembly Law if there’s a possibility that you’ve suffered some sort of wrong. You should seek legal counsel immediately to be compensated for the fiduciary’s wrongful actions. A qualified business attorney at Trembly Law Firm can discuss your legal needs and help determine whether you are entitled to monetary compensation from the fiduciary who may have wronged you.
Professional legal help from Trembly Law Firm is offered to those who might be dealing with a breach of fiduciary duty from someone they trusted. Make sure to contact us online today so we can get you in touch with our seasoned law team.
Overview of Breach of Fiduciary Duty
In order to show that breach of fiduciary duty has occurred, you must first clearly demonstrate that a fiduciary obligation existed. Once this is established, you must show that the other party’s conduct violated this obligation. In addition, you must also show that this violation caused damages. Breach of fiduciary duty can take many different forms. In some cases, such as a business partnership, the breach of duty can reveal itself as one party working directly against the best interests of the company. In other cases, a breach of fiduciary duty can reveal itself in the form of negligence. Whatever the case may be, if you enter into a fiduciary relationship, you need to have the tools to identify a breach and then take the steps to rectify the situation in the event that a breach takes place.
Essentially, a fiduciary relationship is a situation which involves one party placing trust in another party. Included within this trust is an obligation to act in the best interest of the other party. Whenever this type of relationship is acknowledged between two or more parties, then the foundation is created to establish a formal fiduciary relationship. In order for a fiduciary relationship to be enforceable, the parties must develop a contract which spells out the duties and obligations as clearly as possible. Certain types of relationships are known to involve fiduciary obligations in all cases. For example, when a party creating a trust appoints someone as trustee, this trustee has a fiduciary obligation toward any beneficiaries.
No matter what specific context a fiduciary obligation arises, the party who accepts his or her fiduciary role takes on the responsibility to act in good conscience and for the best interest of the other party (or parties). Because a formal obligation arises, consequences follow whenever this trust is broken.
Examples of Fiduciary Obligations
Fiduciary obligations are created whenever a formal fiduciary relationship is established. In addition to establishing fiduciary relationships through contracts (as mentioned), fiduciary relationships can also be created as a matter of law. Certain relationships, such as those involving trusts, are recognized as being fiduciary in nature.
Here is an incomplete list of the types of relationships which involve fiduciary obligations:
- Executor / heir
- Trustee / beneficiary
- Corporate officer / shareholder
- Business partners
- Attorney / client
- Physician / patient
Providing a Precise Definition of Breach of Fiduciary Duty
Breach of fiduciary duty can take a wide range of forms. The number of forms is as diverse as the number of fiduciary relationships which exist. The key thing which defines a breach of duty is acting against the best interest of the party which placed trust. To prove breach of fiduciary duty, the party alleging the breach will need to show 3 elements:
- The existence of a fiduciary relationship/obligation
- The fiduciary did breach the obligation with his or her behavior
- The breach directly caused damages
If these 3 elements can be shown, then a party may have a viable case.
One example of a breach of fiduciary duty would be an attorney who strikes a deal which is clearly not the best interest of his or her client. Another example would be a business partner who diverts company funds in order to pay off personal debts or to invest in projects without obtaining prior approval from other partners. In these situations, the non-breaching parties may be able to recover damages. For instance, in the case involving the business partner, the other partners may be able to recover the amount which was lost as a result of the breach.
Contact a South Florida Law Firm for Breach of Fiduciary Duty
If you think that you may need assistance with a breach of fiduciary duty situation, give the Trembly Law Firm a call today. At the Trembly Law Firm, we can sit down and provide an analysis of your situation and develop the best strategy for moving forward. Depending on the situation, we can help identify whether a fiduciary relationship was in fact created, or whether a breach did in fact occur, and so forth. In some cases, there may be questions about whether a fiduciary relationship can be demonstrated, or whether damages can be adequately tied to a breach of duty. No matter what sort of issues you may be grappling with, our attorneys can provide expert assistance and provide guidance on how to proceed. Give us a call today to learn more.
Frequently Asked Questions
South Florida Business Attorney Brett Trembly addresses commonly asked business law questions in his Video of the Month series. If you have any questions for us, or if you need immediate legal assistance, please contact us today.
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