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Breach of fiduciary duty must have three elements present

On Behalf of | Jun 16, 2020 | business litigation

Some business litigation lawsuits are based on a breach of fiduciary duty. In the most basic of terms, fiduciary duty means that one party has an obligation to handle financial decisions in the best interest of another party. When that duty is breached, the person who held the fiduciary duty might face a legal action in civil court.

Cases involving these claims are often very complex because of the intricacy of the elements that must be present. Whatever side of a lawsuit over a breach of someone’s fiduciary duty you are on, it helps to understand these factors.

One of the primary things that must be proven is that the plaintiff had the right to expect the defendant to meet a fiduciary duty. This can be met in a variety of ways, so looking at the specifics of the case might help you to ensure this point is present. A duty of loyalty, one of full disclosure or one of good faith are some examples of how this element can be met.

Another element is that a breach occurred. This is where things can become rather complicated. Some people who hold a fiduciary duty are involved in risky ventures. For example, an investment professional holds this duty to their clients, but it’s possible that the client will lose money even when the professional acted in the client’s best interests.

In order for it to be considered a breach, the fiduciary must do something that clearly isn’t in the client’s best interests. This might be misrepresenting facts, misappropriating funds or hiding a conflict of interest.

Finally, there must be damages involved in the case. These must be directly tied to the breach of fiduciary duty.

It might be beneficial to work with someone who’s familiar with these cases so that you’re able to find out what options you have for your side.