Individuals in New York become guilty of breaching their fiduciary duties when the entity fails to take actions that represent the best interests of a client who placed their trust in the fiduciary. Business and commercial law recognizes a fiduciary duty whenever one person accepts the legal responsibility to act on behalf of another person. Examples include the relationship between an attorney and their client or a guardian who cares for a minor. Fiduciary duties are legally binding for the fiduciary. The fiduciary must take care to always act in the best interest of a principal.
Breach of duty
Principals who claim a fiduciary is guilty of breaching their duties must use business and commercial law to establish four elements to support this claim:
- Duty – Legalities and ethics govern the behavior of many professionals. But these standards are not the same as acting in the best interests of a client. A fiduciary relationship must be established and accepted by both parties involved before a breach can occur.
- Breach – A clear breach of responsibility must occur. One example is an accountant who makes a mistake on a client’s tax returns that causes the client to pay penalties.
- Damages – A plaintiff must demonstrate damages from the breach. Many times, these damages involve a conflict of interest. For example, a trustee who sells property owned by a principal for less than its value to a relative may possess a conflict of interest. But the plaintiff will need to show the exact amount of money that they lost to support the claim.
- Causation – Plaintiffs must also demonstrate a clear link between the breach of duties and the damages received.
A breach of fiduciary duty can cause much damage to the life and financial well-being of a client or guardian of the fiduciary. Individuals affected by a breach of fiduciary duty may benefit from a consultation with an attorney.