A
fiduciary duty is the obligation to act for the other party in the best
interest. The individual act in a fiduciary capacity and is held to a high
standard of disclosure and full honesty with the intention to communicate with
the client and should not obtain the benefit at the client expense personally. The
fiduciary duty is a legal term that explains the connection among two parties
and obligates the person to act in the interest of other solely (Yang, 2017). The party that owes
the legal duty to a principal designated as the fiduciary where strict care
needs to be taken into consideration with the intention to make sure that there
is no conflict of interest that arises among the fiduciary and its principles. The
five duties an agent is said to owe his principal include accounting,
performance, notification, obedience and loyalty (Flannigan, 2017).
The
performance means agent need to do the job using reasonable skill, the
notification means agent needs obligation to keep the principal informed,
loyalty means agent need to act in a loyal way for the principal interest and
obedience mean agent needs to follow all legal orders. In the business life, I
have seen that when a party has obligation to act in the other party interest
such as the board of the member’s duty to the shareholders referred to the
fiduciary responsibility. This shows that fiduciary duty involve
client/attorney, agent/principal and beneficiary/trustee. I have seen that
employer offer benefit plans such as pension plans or other kind of benefit
plans with the intention to ensure that they are bound by the fiduciary duty
definition and set forth in the Employee Retirement Income Security Act of 1974
(Shaikh, Drira and Hassine, 2019).
I
have been involved in a situation where fiduciary duty had been breached as I
was correct at that time. This was done because fiduciary duty breach happens
only when the fiduciary acts in the interest of individuals instead of the best
interest of the principal or employer. The action by the fiduciary has been
seen as free of conflicts of self-dealing and interest. As a fiduciary, the
person cannot use the principal for their own benefit. I was correct because
the duty of care require each partner to give best service or advice. But when
the fiduciary duty applied on the partner they would require disclose any
relevant information to the partners in the scope of the relationship.
I think duty owned by the partner only depends on whether partnership is a limited or general partnership (Margolis, 2015).
I think duty owned by the partner only depends on whether partnership is a limited or general partnership (Margolis, 2015).
As
I was correct, I have seen that if a limited partner doesn’t take part in
operating the limited partnership then the individual can be treated as the
general partner with fiduciary duty by the courts. I have identified that
breach of fiduciary duty is to break the trust with partners who owed such
duty. It also concerns that when one partner fails to uphold the obligations to
the partnership financially that the duty becomes the obligation and may imply
with a trust level. On the other hand, if the trust of the partner is violated
then the duty has been said to be breached. The person in the business is the
one accused the fiduciary duty breach whereas the defense will be to act in a
positive way to prove that the person act in the agreements and boundaries of
his or her own position (Yang, 2017).
In
the business, I have seen that partner fill the claim because he or she has the
burden of proof, unfair benefit or cite the self-dealing involving the
participation in a transaction. Hence, I can say that it is a serious concept
done in the business because each and every partner in the business is prepared
to take full accountability to fulfill that duty to take the partnership. The
relationship for fiduciary found in the business includes the relationship
among the professional and the client. The attorney in the business is the
client fiduciary and the client should be able to act with loyalty and fairness
to deal with the client (Yang, 2017).
I
have identified that CPAs and accountants can be found to be fiduciaries for
their own clients or customers. Even the real estate agents and brokers are
held to the fiduciary standards since there is a trust position to work on
behalf of the other party. In the end, I would say that the experience related
to the fiduciary duty in the business has been identified. I think it is quite
imperative to comprehend relationships and the responsibilities as well as
rights of the party in any connection. In business, there are some of the
serious breaches that include violating the confidentiality by using the
information from the client to benefit the professional and misappropriation or
theft of the funds or property.
References
Flannigan, R. (2017). Compound Fiduciary
Duty. SSRN Electronic Journal. Doi: 10.2139/ssrn.3060825
Margolis, J. (2015). Professionalism, Fiduciary
Duty, and Health-Related Business Leadership. JAMA, 313(18),
p.1819. Doi: 10.1001/jama.2015.4398
Shaikh, I., Drira, M. and Hassine, S. (2019).
What motivates directors to pursue long-term strategic risks? Economic
incentives vs. fiduciary duty. Journal of Business Research, 101,
pp.218-228. Doi:
10.1016/j.jbusres.2019.04.022
Yang, T. (2017). (Directors' & Controlling
Shareholder's Fiduciary Duty and Business Judgment Rule). SSRN
Electronic Journal. Doi: 10.2139/ssrn.2924306
