What are fiduciary duties and how do they relate to conflicts of interest?

What are fiduciary duties and how do they relate to conflicts of interest?

Fiduciary duties are legal obligations to act in the best interest of another party. They often arise in relationships like that of a trustee and beneficiary, or an attorney and client. Conflicts of interest occur when a fiduciary's personal interests could potentially interfere with their duty to act in the best interest of the other party.

Can you give me an example of a conflict of interest?

Sure! A common example is when a financial advisor recommends investments that benefit them through commissions, rather than what is best for their client. This creates a conflict between their personal gain and their fiduciary duty to the client.

How can fiduciaries avoid conflicts of interest?

Fiduciaries can avoid conflicts of interest by fully disclosing any potential conflicts to the parties involved, seeking consent, and ensuring that their decisions are based solely on the best interests of those they serve.

What are the consequences of breaching fiduciary duties?

Breaching fiduciary duties can lead to legal consequences, including lawsuits for damages, loss of professional licenses, and reputational harm. The affected party may seek restitution for any losses incurred due to the breach.