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Breach of Fiduciary Duty
Breach of Fiduciary Duty occurs when a person commits an act that breaches a duty owed to another by virtue of a fiduciary relationship. The nature of fiduciary duties depends on the type of fiduciary relationship, and may include the Duty of Good Faith, the Duty of Due Care, and the Duty of Loyalty.
The elements of a breach of fiduciary duty claim are:
- The existence of a fiduciary duty between the parties;
- Breach of the duty; and
- The breach proximately caused damages to the other party.
The Duty of Good Faith may require the fiduciary to act honestly and fairly and make decisions that he or she reasonably believes are in the best interests of the other party. The Duty of Due Care may require the fiduciary to proactively act to prevent harm to the other party if it would be ordinarily prudent to do so. The Duty of Loyalty may prohibit the fiduciary from taking actions that benefit the fiduciary at the expense of the other party.
Examples of events that may constitute breaches of fiduciary duties include:
- Usurping Corporate Opportunities
- Flagrant Diversion of Assets
- Failure to Disclosure Information
- Insider Trading
- Acting Without Adequate Information
- Wasting Assets of the Other Party