Breach-of-Fiduciary-DutyBreach of fiduciary duty claims are common in business litigation matters.  Breach of fiduciary duty is a broad concept that may arise in many different business contexts, like situations of shareholder disputes, partnership disputes or even fraud.  Some common breach of fiduciary duty matters our Charleston business litigation lawyer address are:

There are two essential types of corporate fiduciary relationships. First, there are those fiduciary duties created under the law that apply to a particular relationship governed by statute (such as partner and partnership, director or shareholder and corporation) or as applied to contractual relationships (such as principal and agent or attorney or member and limited liability company). Second, there are those fiduciary relationships created as a result of factual situations underlying the business relationship of the parties and/or the particular business transaction. Issues to consider in a breach of fiduciary duty context are:

  • Whether a fiduciary relationship existed at the time of the alleged corporate misconduct.
  • If a fiduciary relationship existed, what was the scope of the fiduciary relationship;
  • Whether the breach of fiduciary duty and/or corporate misconduct arose within the scope of the relationship.

Addressing these types of issues is only the beginning of the legal analysis.  Even though there is no universally accepted definition of when a fiduciary relationship arises in a business context,  the following are indicators of the relationship:  one person acts for another; one person has and exercises influence over another; one person places confidence in another; one person has dominance over another; there is inequality between the parties; and one person is dependent on another.  In addition, South Carolina courts have considered age, mental strength, business smarts, knowledge of the facts involved and other conditions that may give an individual an advantage over the other.

When dealing with breach of fiduciary duty disputes courts consider the age, mental strength, business smarts, and knowledge of the facts of the parties and other conditions that may give an individual an advantage over the other.

Most Common Breaches of Fiduciary Duties

There are many ways in which fiduciaries may breach the duties they owe to other. Among the most common breaches of fiduciary duty include:

  • Self Dealing (i.e., through conflict of interest business transactions or reaping of personal gain or personal economic profits).
  • Usurpation of business or corporate opportunity.
  • Misappropriation of corporate funds or corporate property.
  • Corporate neglect, business imprudence, of lack of necessary business skill and experience.
  • Failure to act in the business owners’, shareholders’, or members’ best interest.
  • Misrepresentation or omission as to a statement of fact (e.g., corporate financial conditions or business statement of affairs).
  • Inducement.
  • Breach of corporate fiduciary duty (e.g., to provide accurate corporate information).
  • Misuse of confidential information or breach of confidentiality.
  • Misuse of superior knowledge.
  • Failure to disclose.
  • Corporate aiding and abetting or acting in concert with another.
  • Rendering inappropriate advice or counsel (e.g., bad business ore corporate investment advice).
  • Misuse of superior or influential position.