Date: 27/03/23
EQUITY & TRUSTS TUTORIAL 6
Fiduciary Duties A fiduciary relationship arises whenever one party owes
what is called a fiduciary duty to another. The most obvious is probably the
relationship between the trustees and beneficiaries of a trust.
However, fiduciary duties do not just arise in the relationship of trustee
and beneficiary. They occur in a number of other circumstances. The duty
arises wherever you have one person acting in relation to the property of
another, or looking after property for another.
Examples of fiduciary duty: personal representative and beneficiary
solicitor and client director and company, principal and agent partners in a
firm.
Personal representatives, or PRs as they are commonly called, look after a
deceased person’s property until they are in a position to distribute it
among the beneficiaries.
During this period, the PRs are responsible for looking after the property for
the beneficiaries, and, because of this relationship, the PRs owe the
beneficiaries a fiduciary duty.
Solicitors also owe a fiduciary duty to their clients. There is a whole set of
specific rules dictating what solicitors can and cannot do, but underpinning all
these rules is the solicitors’ fiduciary obligations to their clients. Solicitors
must always act with the utmost good faith towards their clients, with their
clients’ interests being paramount.
There is also a fiduciary relationship between director and company. A
company can hold property and enter contracts in its own name, but it needs
people to carry out actions on its behalf. This is what the directors do – they
deal with the day- to-day running of the company. In carrying out their
actions, directors must always act in the best interests of the company and
must not let their own interests' conflict with the interests of the company.
EQUITY & TRUSTS TUTORIAL 6
Fiduciary Duties A fiduciary relationship arises whenever one party owes
what is called a fiduciary duty to another. The most obvious is probably the
relationship between the trustees and beneficiaries of a trust.
However, fiduciary duties do not just arise in the relationship of trustee
and beneficiary. They occur in a number of other circumstances. The duty
arises wherever you have one person acting in relation to the property of
another, or looking after property for another.
Examples of fiduciary duty: personal representative and beneficiary
solicitor and client director and company, principal and agent partners in a
firm.
Personal representatives, or PRs as they are commonly called, look after a
deceased person’s property until they are in a position to distribute it
among the beneficiaries.
During this period, the PRs are responsible for looking after the property for
the beneficiaries, and, because of this relationship, the PRs owe the
beneficiaries a fiduciary duty.
Solicitors also owe a fiduciary duty to their clients. There is a whole set of
specific rules dictating what solicitors can and cannot do, but underpinning all
these rules is the solicitors’ fiduciary obligations to their clients. Solicitors
must always act with the utmost good faith towards their clients, with their
clients’ interests being paramount.
There is also a fiduciary relationship between director and company. A
company can hold property and enter contracts in its own name, but it needs
people to carry out actions on its behalf. This is what the directors do – they
deal with the day- to-day running of the company. In carrying out their
actions, directors must always act in the best interests of the company and
must not let their own interests' conflict with the interests of the company.
