The concept of fiduciary duty

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).

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