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What Is A Breach Of Fiduciary Duty?

On Behalf of | Oct 5, 2017 | Business Law

There may come a time where you need someone to act in your best interests. In fact, this happens quite often in the business world. However, there’s often a risk when asking someone to act on your behalf, especially when doing so would present an opportunity for them to gain at your expense. You can make sure the person you choose to perform those duties adheres to their responsibility through a provision known as “fiduciary duty.”

However, what happens when the entrusted individual (the fiduciary) breaches their responsibility and acts in their own interests instead of those of the principal? This is known as a “breach of fiduciary duty,” and could lead to damages that you could hold them responsible for.

When someone entrusted with assets, including financial assets, corporate property, trade secrets, or anything else vital to a business deal, a fiduciary is required to use them only for the gain of whoever entrusted them with the fiduciary duty. In some cases, that may even mean the fiduciary is required to forego an opportunity for personal gain and even possibly sustain a personal loss if it means protecting the principal’s best interests.


Fiduciaries using assets they have privileged access to for their own benefit could be seen in a number of ways. On one hand, this could be considered “embezzlement” or “fraud” depending on the nature of the assets and how they were entrusted to the fiduciary. However, these could be difficult to prove and ultimately prove fruitless if evidence isn’t sufficient.

However, proving a breach of fiduciary duty is much simpler. To prove a breach of fiduciary duty, all you need to do is show that you in some way breached your duties as a fiduciary in order to gain personally. In other words, as long as you can prove that the fiduciary acted in a way that did not benefit you in order to gain personally themselves, you can hold them accountable for the breach.


Fiduciaries who breach their responsibilities could be held liable for the damages that the parties in question have suffered. For example, if a worker responsible for making purchases decides to buy from a more expensive supplier in exchange for receiving a personal kickback or benefits from that supplier, the purchaser could be held responsible for the damages (lost profits) sustained by their employer, along with other considerations and equitable remedies.