When a business relationship is formed, the parties have certain responsibilities to one another, the enterprise, and the stakeholders. In some cases, an individual will owe what is called a fiduciary duty in this context. When a party breaches their fiduciary duty, there can be significant consequences for them, the business, and others involved with the organization. Therefore, knowing how to identify a fiduciary duty breach is crucial in business. Here is more on recognizing a breach of fiduciary duty.
What is a Fiduciary Duty?
A fiduciary duty is an obligation to act in a certain way that is in the best interest of an individual, entity, organization, or group. When someone owes a fiduciary duty in business, they must put the entity and its shareholders’ interests above their own personal interests.
When is a Fiduciary Owed in Business?
A fiduciary duty can be owed when an individual accepts a role within a business or creates a type of structure. This relationship can also be created between a trustee and trust beneficiaries.
What are the Fiduciary’s Duties
When someone has a fiduciary duty, they owe a duty of loyalty and a duty of care. A duty of loyalty means that the fiduciary will act in the best interest of the parties or entity to whom they are beholden. A duty of care generally means that the individual will act reasonably when performing tasks related to their role as a fiduciary.
Who Owes a Fiduciary Duty in Florida?
Fiduciary relationships can arise in various business contexts. Some of the roles that involve a fiduciary relationship include those such as:
- Business partners
- Members and managers of a limited liability company (LLC)
- Corporate board members
- Trustees
Fiduciary relationships are usually established through written agreements such as those between partners, operating agreements, and other legal instruments. However, this obligation can also be established when certain relationships are formed.
How Can I Tell if there Has Been a Breach of Fiduciary Duty?
The first step in determining whether there has been a breach of fiduciary duty is to determine that the duty exists within the relationship. Next, the injured party would have to be able to show that there has been a breach. Generally, a breach of fiduciary duty involves the fiduciary self-dealing or acting in their own best interest. Lastly, the breach must have caused harm to the protected party. This element can be established through evidence such as financial records.
Breach of fiduciary duty can arise in business when the fiduciary fails to safeguard an entity’s information or finances or acts in a competitor’s best interest. This type of breach can also occur when the fiduciary profits at the business’s expense, harm the entity’s reputation or neglects their duties.
If you suspect that there has been a breach of fiduciary duty or have a fiduciary duty to or within a business, you should contact an experienced Florida business attorney to discuss your situation. Your Florida business lawyer can help you evaluate the entity and learn more about recognizing a breach of fiduciary duty with respect to your enterprise and business relationships.
Contact an Experienced Florida Business Lawyer
Understanding and recognizing a breach of fiduciary duty is essential to operating a Florida small business. Attorney Richard Sierra at the Florida Small Business Legal Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.