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Legal Dictionary

fiduciary

Legal Definition of fiduciary

Noun

  1. Normally, the term is synonymous to a trustee, which is the classic form of a fiduciary relationship. A fiduciary has rights and powers which would normally belong to another person. The fiduciary holds those rights which he or she must exercise to the benefit of the beneficiary. A fiduciary must not allow any conflict of interest to infect their duties towards the beneficiary and must exercise a high standard of care in protecting or promoting the interests of the beneficiary. Fiduciary responsibilities exist for persons other than trustees such as between solicitor and client and principal and agent.

Definition of fiduciary

Etymology

    From Latin fiduciarius ("held in trust"), derived from fiducia ("trust").

Noun

fiduciary (plural fiduciaries)

  1. One who holds a thing in trust for another; a trustee.
  2. One who depends for salvation on faith, without works; an antinomian.

Adjective

fiduciary (comparative more fiduciary, superlative most fiduciary)

  1. Related to trusts and trustees.

    A fiduciary contract.

Further reading

A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary and a principal. One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment. In a fiduciary relation one person, in a position of vulnerability, justifiably reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests.

    "A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.[1]"

A fiduciary duty[1] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents. The word itself comes originally from the Latin fides, meaning faith, and fiducia, trust.

In English common law the fiduciary relation is arguably the most important concept within the portion of the legal system known as equity. In the United Kingdom, the Judicature Acts merged the courts of equity (historically based in England's Court of Chancery) with the courts of common law, and as a result the concept of fiduciary duty also became usable in common law courts.

When a fiduciary duty is imposed, equity requires a stricter standard of behavior than the comparable tortious duty of care at common law. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from his fiduciary position without express knowledge and consent. A fiduciary cannot have a conflict of interest. It has been said that fiduciaries must conduct themselves "at a level higher than that trodden by the crowd"[2] and that "[t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty."[3]

References

  1. Breach of Fiduciary Duty Law & Legal Definition. Legal Definitions Legal Terms Dictionary.
  2. C. P. Sherman, Roman law in the modern world. New Haven, Conn., U.S.A.: New Haven Law Book (1922), pp.182-83. Google Book Search.
  3. Gai Institutiones or Institutes of Roman Law by Gaius, with a Translation and Commentary by Edward Poste. Oxford: Clarendon Press, 1904. Online Library of Liberty - DE MANV. - Institutes of Roman Law. World Wide Web Consortium.

References:

  1. Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.



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