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What is a Fiduciary Duty?

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Fiduciary duty is a legal obligation to act solely in another party's interests. It is established by taking on professional or personal responsibilities. For example, a corporate officer has a fiduciary duty to shareholders and a doctor has a fiduciary duty to a patient. The term fiduciary duty has also been interpreted in some jurisdictions to extend to family and other personal duties.
A fiduciary relationship is typically created when a person or group that is in a position of vulnerability vests trust, reliance and good faith in the representation, advice and protection of a professional. The parties being represented are known as the principle and the representative is known as the fiduciary.
The duty of a fiduciary to a principle may include:
- undivided loyalty
- representing the interests of the principle in good faith
- acting without self-interest
- confidentiality
- exercising care, due diligence and prudence
- protecting money and assets
- avoiding conflicts of interest
- promptly informing the principle of material information
- maintaining detailed records and accounts
- not to profit without the knowledge and consent of the principle
Overview: Fiduciary Duty
Type
Compliance
Definition (1)
A legal obligation to act solely in another party's interests in the context of a role or position.
Definition (2)
A duty to act with diligent undivided loyalty to protect the interests of a principle.
Related Concepts
Fiduciary vs Principle
Conflict Of Interest
Compliance
Moral Hazard

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