A breach of fiduciary duty is when a party, such as a corporate board member, has a duty to act in the best interest of someone else such as the company’s stakeholders but acts opposite to that duty. Breach of fiduciary duty is placing your own self-interest above that of your fiduciary that you are otherwise supposed to protect.
According to RocketLawyer, “A fiduciary’s actions must be free of conflicts of interest and self-dealing. As a fiduciary, you can’t use the principal for your own personal advantage.” Meaning, you cannot use corporate assets or property for your personal advances.
There’s no need to prove criminal intent or prove fraudulent behavior insofar as a breach of fiduciary duty complaint is easier to prove.
Breach of Fiduciary Duty Claim
In order to win in a claim for breach of fiduciary duty, one must prove:
- The accused had duties to the plaintiff
- The accused breached their duty
- The complainant suffered damages
Breach of Fiduciary Duty Penalties
Penalties for a breach of fiduciary duty include:
- Compensatory Damages: Compensatory damages are money that’s awarded to a complainant to compensate for damages or incurred loss.
- Punitive Damages: Punitive damages are a punishment to the offending party and are awarded at a court’s discretion when the misconduct shocks the conscience.
- Professional Consequences: Consequences that can affect your career such as loss of accreditation or professional licensing.
According to UpCounsel, “If the party fails to fulfill his legal obligations, it is a breach of fiduciary duty and can result in a lawsuit in civil court.”
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