In business, shareholders, employers, and partners are expected to make decisions that are in the best interest of the entity they own or operate. These parties usually have what is known as a fiduciary relationship with the business. When an individual in this role places their own interest above that of the organization, they may have breached their fiduciary duty. In Florida, a breach of fiduciary duty can have significant legal and financial consequences for the breaching party. Here is more on understanding fiduciary duty in Florida.
What is a Fiduciary Duty?
When someone has a fiduciary duty, they have a responsibility to make decisions that is in the best interest of another individual or entity.
A fiduciary duty includes having a duty of care and loyalty to the person or organization and to act in good faith. In the business context, someone with a fiduciary duty would be obligated to make investments and other decisions that serve the organization’s good.
Who Has a Fiduciary Relationship?
In business, fiduciary relationships generally exist between:
- Agents and principals
- Business partners, and
- Corporate officers and shareholders.
Each of these business relationships creates a fiduciary duty. Meaning that the obligated party owes the fiduciary duties of good faith, care, and loyalty.
Agent and Principal
- In an agency/principal relationship, the agent is responsible for taking action through their apparent authority, employment, or by contract.
- In all of these situations, the agent is in a position of trust and is therefore responsible for making decisions for the principal that are in the principal’s best interest.
Business Partners
- When a Florida partnership is formed, each partner will owe specific fiduciary duties under the law.
- Not every act is prohibited, and in some instances, a partner can act in their own interests.
- However, generally, a Florida partner must refrain from doing things that are harmful to their partnership.
If you are in a Florida partnership, it’s crucial that you understand your fiduciary duties. Contact us today to talk to an experienced Florida business attorney who can help you learn more about your partnership responsibilities.
Corporate Officers
- In Florida, corporate officers have a fiduciary to exercise their powers in a manner that protects the interests of the corporate entity (which is owned by shareholders).
- Corporate officers must also take actions that benefit all shareholders, find out material information before making choices that impact the corporation, disclose conflicts of interest, and engage in other actions to protect the entity’s best interest.
Employee Fiduciary Duties
There can also be situations when employees breach their fiduciary duty to their employers. These may occur when an employee engages in certain actions. These may include stealing trade secrets, committing fraud, or operating a covert competing business. An employer may have legal remedies against the employee in these and other situations.
What Happens When There is a Breach of Fiduciary Duty?
In Florida, when a party breaches their fiduciary duty, it could give rise to a legal claim. Someone making this claim would have to establish that:
- There is an existing fiduciary relationship,
- There has been a breach of a fiduciary duty, and
- The breach has caused damages.
If an injured party can establish these elements, they may be able to recover monetary damages (compensation).
Damages for Breach of a Fiduciary Duty
Someone who has been injured by a breach of fiduciary duty may be entitled to various types of damages. Often, the injured party will want to be compensated for their financial losses. They may want equitable relief as well.
If you have an existing fiduciary relationship and believe there has been a breach, you should contact an experienced Florida business attorney today to discuss your case. Contact us today to schedule an appointment.
Contact an Experienced Florida Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with 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.