There are some business relationships in Texas, and elsewhere, which may impose legal requirements of care and loyalty. These requirements may be referred to as a fiduciary duty. According to the Cornell University Law School’s Legal Information Institute, a fiduciary duty is a legal responsibility to act solely in the interests of another person, group or business. Failing to uphold these duties may be considered a breach of your fiduciary duties, which may lead to a business dispute.
There are numerous examples of fiduciary relationships. For example, an investment manager might owe a fiduciary duty to the participants in a pension plan. As a fiduciary, or someone who owes such a duty, you make take legal title to certain assets. However, the assets do not belong to you. Rather, you are only permitted to administer and manage the assets for a specific purpose and for a limited amount of time. While in control of the assets, you are expected and required to manage them in accordance with the wishes of the person who you are representing.
Unless you have the express consent of the person whose interest you are acting in, you are not permitted to profit from your relationship. Consequently, you must avoid any situations that may be seen as a conflict of interests. This includes conflicting interests between you and your principal, or the person you owe a duty to, as well as the those between your principal and any of your other clients.
This post has provided an overview of fiduciary duties. It is important to keep in mind, however, that each relationship and situation is unique. Therefore, this post should be taken as general information and should not be considered legal advice.