This chapter examines the nature of fiduciary duties and how a fiduciary relationship can be identified. It emphasizes that trustees are fiduciaries, and so are subject to fiduciary duties, but also considers other fiduciary relationships. The chapter analyses the nature and function of fiduciary obligations. It examines in detail the two core fiduciary duties of ensuring that there is no conflict between a fiduciary’s personal interest and their duty to the principal and also that a fiduciary should not profit from their fiduciary position. The chapter discusses the consequences of a breach of fiduciary duty and the available remedies for such a breach. In particular, the chapter considers when and why profits obtained by a fiduciary in breach of a fiduciary duty should be held on constructive trust for the principal, with particular reference to the receipt of bribes and secret commissions.
Chapter
15. Fiduciary Duties
Chapter
12. Duty to avoid a conflict of interest
This chapter discusses the director’s duty to avoid a situation in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect (the no-conflict rule); and the equally inflexible rule that, without consent, a person in a fiduciary position is not entitled to profit from that position (the no-profit rule or, more accurately no secret profit rule). These key obligations are discussed in detail, exploring the extent of the strict duty to avoid a conflict and the judicial attitude to breaches of duty. The need for disclosure and authorisation is discussed. Benefits from third parties and conflicts from proposed transactions with the company are also addressed.
Chapter
15. Fiduciary Duties
This chapter examines the nature of fiduciary duties and how a fiduciary relationship can be identified. It emphasizes that trustees are fiduciaries, and so are subject to fiduciary duties, but also considers other fiduciary relationships. The chapter analyses the nature and function of fiduciary obligations. It examines in detail the two core fiduciary duties of ensuring that there is no conflict between a fiduciary’s personal interest and their duty to the principal and also that a fiduciary should not profit from their fiduciary position. The chapter discusses the consequences of a breach of fiduciary duty and the available remedies for such a breach. In particular, the chapter considers when and why profits obtained by a fiduciary in breach of a fiduciary duty should be held on constructive trust for the principal, with particular reference to the receipt of bribes and secret commissions.
Chapter
12. Duty to avoid a conflict of interest
This chapter discusses the director’s duty to avoid a situation in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect (the no-conflict rule); and the equally inflexible rule that, without consent, a person in a fiduciary position is not entitled to profit from that position (the no-profit rule or, more accurately no secret profit rule). These two rules, as the most important fiduciary obligations, are considered in detail alongside the extensive case law addressing these duties. Hence consideration is given to the scope of the no-conflict, no-profit obligation, the limitations on exploiting property, information, or opportunities, looked at from the company’s position and the position of the conflicted director. The position on resignation and the possibilities of authorisation are also considered. Benefits obtained from third parties as well as conflicted transactions with the company are also addressed
