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Legal elements of a breach of fiduciary duty

On Behalf of | Oct 4, 2019 | Contract Disputes

When people work together in a business setting, they are expected to always act in the best interests others. Often, employees, partners and shareholders are contractually obliged to do this. Acting in one’s self-interest or in a way that is against the best interests of the party one should be faithful toward is known as a breach of fiduciary duty.

If you have been affected because someone breached their fiduciary duty toward you, you may be able to take legal action and gain back damages. Before you do so, understand the four elements of the crime.

The existence of a fiduciary duty

The person taking legal action should be able to show that the defendant had a fiduciary duty toward them. This could be shown by proving the nature of their relationship. For example, if you are a shareholder of a corporation, the director of the corporation has a fiduciary duty toward you. Similarly, the trustee of an estate owes a fiduciary duty to the beneficiaries of that estate.

The breach of this duty

There should be conclusive evidence to show that the defendant acted in breach of this trust. This could be by showing that they were deceptive in their actions, or that they acted in a way that was not in the best interests of the plaintiff.

Damages suffered by the plaintiff

Even if the defendant breached the plaintiff’s fiduciary duty, it would not be possible to claim damages unless something of value was lost due to this breach. The plaintiff must show that they suffered financially or otherwise due to the breach of trust.

The establishment of a clear causal link

Finally, there must be a clear link made between the breach of fiduciary duty and the damages suffered. The plaintiff should show that, if it were not for the specific breach of fiduciary duty that the defendant was responsible for, they would have not suffered the damages that they did.

It can be possible to recover the damages you lost as a result of being a victim of a breach of fiduciary duty. In addition, you may be able to gain punitive damages if the breach was caused out of malice or fraud.