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  • Aaron W Saoud, Esq.

What is a Breach of Fiduciary Duty?

A breach of fiduciary duty occurs when a person or entity fails to fulfill their obligations or duties to act in the best interest of another party. Fiduciary duties are legal obligations that require individuals to act with honesty, integrity, and loyalty toward those they are obligated to serve.

Common examples of fiduciary relationships include those between trustees and beneficiaries, directors and shareholders, attorneys and clients, and agents and principals. In these relationships, the fiduciary is expected to prioritize the interests of the beneficiary or client above their own and to avoid conflicts of interest.

A breach of fiduciary duty can take various forms, such as:

1. Self-dealing: Acting in a manner that benefits the fiduciary at the expense of the beneficiary.

2. Conflict of interest: Putting personal interests ahead of the interests of the beneficiary or failing to disclose conflicts of interest.

3. Negligence: Failing to exercise the level of care, diligence, and skill that a reasonable person in a similar position would exercise.

4. Misuse of assets: Using assets or resources entrusted to the fiduciary for personal gain or purposes unrelated to the beneficiary's interests.

5. Failure to disclose information: Withholding relevant information from the beneficiary that could impact their interests or decisions.

When a breach of fiduciary duty occurs, the affected party may have legal recourse to seek damages, restitution, or other remedies through civil litigation. The specific consequences and legal remedies available will depend on the nature and severity of the breach, as well as applicable laws and regulations.

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