A fiduciary is a person who has the power and obligation to act or give advice for the benefit of another within the scope of the agreed upon relationship, usually described in some form of contract, such as a will or employment agreement.
The fiduciary relationship does not need to be a legal one, according to the Florida Supreme Court. The responsibility may be one of a moral, social, domestic or personal nature. If a relationship of trust and confidence exists between the parties, then it is a fiduciary relationship. [Quinn v. Phipps, 113 So. 419, 421 (Fla. 1927)]
In most cases, a fiduciary has the responsibility to manage and protect property or money for another person or business. The position of a fiduciary comes with a duty of loyalty, or fiduciary duty, to the beneficiaries. The beneficiaries are the people for whom the fiduciary agreed to act.
The fiduciary must avoid any conflict of interest between his personal interests and the interest of the trust, is prohibited from disclosing material facts, and from acting in his own best interest; the fiduciary must always act in the best interest of the beneficiaries.
In order for a breach of fiduciary duty to occur, there must be the existence of the duty, a breach of that duty, and damages resulting from that breach. Remedies for breach of fiduciary duty are usually in the form of money damages for lost profits, or even salary if the breach was committed by a disloyal employee.
Courts have not limited the types of relationships that fiduciary duty can result from, but the following relationships are universally regarded as fiduciary:
- Principal/ Agent: The agent acts for the principal through employment, by contract, or apparent authority. The agent is the fiduciary.
- Employer/ Employee: The Employer is the fiduciary.
- Single-agent Real Estate Broker/ Client: The broker is the fiduciary.
- CPA/ Client: The CPA is the fiduciary.
- Partnerships: All of the partners have a mutual fiduciary responsibility to each other.
- Business Associates: All have a mutual fiduciary responsibility to each other.
Some breach of fiduciary duty cases could also be considered fraud, such as thefts, acceptance of secret commissions and conflicts of interest. However, breach of fiduciary duty is easier to prove than fraud because there is no need to prove criminal or fraudulent intent.