The Company may, acting reasonably and in good faith, set off from any amount due to the Contractor, any amount due or which may become due to the Company under this Contract. Further Readingįor more on the fiduciary duty, see this Florida State University Law Review article, this Florida Bar Association article, and this UCLA Law Review article.We often see contractual obligations on parties to act in ‘good faith’. Fiduciary duty is imposed whenever confidence is reposed on one side in a contractual relationship, so as to allow that side to exert influence and dominance over the other.
For example, attorneys have a fiduciary duty to their clients, a principal to an agent, a guardian to the ward, a priest to the parishioner, and a doctor to the patient. Fiduciary or Confidential RelationsĬertain relationships impose fiduciary duties. 356 (1984)and Samuel & Jessie Kenney Presbyterian Home v. This does not mean, however, that officers of a charity are permitted to divert the earning capacity of the charity to themselves. For example, officers may be allowed to deal in a manner financially advantageous to themselves, so long as the charity is not subject to any expense. Some courts have not required officers of a charity to abide by the same rules as corporate officers. This duty requires directors to act with “complete candor.” In certain circumstances, this requires the directors to disclose to the stockholders “all of the facts and circumstances” relevant to the directors’ decision. Under the duty of prudence, a trustee must administer a trust with the degree of care, skill, and caution that a prudent trustee would exercise. Under the duty of confidentiality, a corporation's directors and officers must keep corporate information confidential and not disclose it for their own benefit.
Under the duty of good faith, a corporation's directors and officers must advance interests of the corporation and fulfill their duties without violating the law. 1939), “Corporate officers and directors are not permitted to use their position of trust and confidence to further their private interest." Duty of Good Faith As the Delaware Supreme Court explained in Guth v.
The duty of loyalty means that all directors and officers of a corporation working in their capacities as corporate fiduciaries must act without personal economic conflict. Rather, the director must assess the information with a “critical eye,” so as to protect the interests of the corporations and its stockholders. Moreover, a director may not simply accept the information presented. Whether the directors were informed of all material information depends on the quality of the information, the advice available, and whether the directors had “sufficient opportunity to acquire knowledge concerning the problem before action.” The duty of care requires that directors inform themselves “prior to making a business decision, of all material information reasonably available to them.” The primary duties are the duty of care and the duty of loyalty.
Corporations and Fiduciary Dutiesĭirectors of corporations, in fulfilling their managerial responsibilities, are charged with certain fiduciary duties. The beneficiaries are typically entitled to damages. If the fiduciary breaches the fiduciary duties, the fiduciary would need to account for the ill-gotten profit. The person who has a fiduciary duty is called the fiduciary, and the person to whom the duty is owed is called the principal or the beneficiary. When someone has a fiduciary duty to someone else, the person with the duty must act in a way that will benefit someone else financially.
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