Proving a Breach of Fiduciary Duty

Claiming that someone breached their fiduciary duty is a serious allegation. Basically, when someone claims a breach of fiduciary duty, they are saying that someone violated the trust placed in them. The consequences of a breach of fiduciary duty can be devastating. The harmed party can seek compensation for the damages incurred. Because of the potential implications of a breach of fiduciary claim, for a claimant to succeed and for the defendant to be held personally liable for damages, the claimant must prove several elements. This article discusses the elements that must be proven to succeed in a breach of fiduciary duty claim.

Understanding Fiduciary Duty

Before discussing the elements that must be demonstrated to successfully prove a breach of fiduciary duty, it is vital that we first understand the meaning of “fiduciary duty.” A fiduciary duty is a legal obligation for a party to act in the best interest of another party. Fiduciaries are people in positions of trust and confidence. Examples of fiduciary relationships in business include the following;

• Partners in a partnership
• Directors and shareholders
• Employees and employers
• Financial advisors and businesses
• Attorneys and businesses

Examples of breach of fiduciary duties in the business setting include the following;

• Self-dealing
• Sharing trade secrets
• Acting on behalf of a competitor
• Failing to reveal a conflict of interest
• Misusing company assets
• Unauthorized transactions
• Fraud or misrepresentation

Proving a Breach of Fiduciary Duty

There are four main elements that a claimant must prove in a breach of fiduciary claim. A successful breach of fiduciary claim must include evidence of all these four elements. The following are the four elements that must be proven in a breach of fiduciary claim;

1. Existence of Fiduciary Duty

The first step in proving a breach of fiduciary duty is establishing the existence of a fiduciary relationship between the involved parties. In a fiduciary relationship, one party (the fiduciary) is legally obligated to act in the other party’s (a principal beneficiary) best interest. Examples of fiduciary business relationships are listed in the previous section.

2. Breach of Fiduciary Duty

It might seem obvious that a claimant must prove a breach of fiduciary duty, but what exactly does proving this entail? Proving a breach of fiduciary duty entails showing that the fiduciary acted in a manner that contradicted their duty. Some breaches are intentional, whereas others occur due to negligence. Negligence arises when a fiduciary fails to act with the level of care necessary in a fiduciary relationship.

3. Damages

Once the first two elements are established, a claimant must show they suffered damages due to the breach. This could include monetary losses, loss of business opportunities, and other damages.

4. Causation

Finally, to prove a breach of fiduciary claim, the plaintiff must prove that the damages they suffered were caused by the defendant and because of the defendant’s breach of fiduciary duty.

Some of the evidence that can be used to prove a breach of fiduciary duty include;

• Financial records
• Witness testimony
• Communication records
• Pattern of behavior
• Expert witnesses

Contact Us for Legal Help

If you need help with a breach of fiduciary claim, contact the qualified business litigation attorneys at SAC Attorneys LLP.