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How do you identify a fiduciary breach?

| Aug 25, 2020 | Business Law And Litigation |

A fiduciary is a party who acts on behalf of another person — often called the principal — usually in business decisions. The fiduciary owes a duty to the principal to keep issues from arising between them. Fiduciaries willingly and knowingly accept that the principal depends on their trust and expertise. The fiduciary should not profit from the relationship unless given permission. So how do you know if a breach has occurred?

Certain elements need to be identified for a legitimate claim. The plaintiff must prove that the fiduciary had a legal duty to them and that a breach occurred. Here are some ways that point to a potential fiduciary breach:

  • Fiduciary benefit. If the fiduciary acts in their own self interest over the interest of the principal, this indicates a fiduciary breach.
  • Third party benefit. If the fiduciary’s actions and advice benefit a third party, this could also be evidence of a fiduciary breach.
  • Failure to provide important information. This can include a fiduciary’s failure to identify or disclose any potential conflicts of interest.
  • Fraud. Intentionally misleading a principal for the purpose of the fiduciary’s own financial gain is a clear fiduciary breach.

To prove their case, a principal must show that the fiduciary owed the principal a duty, the damages caused by the breach, and that the damages occurred as result of actions by the fiduciary.

Groups or individuals who feel that a fiduciary has made a breach might file a lawsuit against them. A lawyer knowledgeable about small business disputes may be able to help them prove their case.

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