A Theory of Fiduciary Liability

By Miller, Paul B. | McGill Law Journal, February 2011 | Go to article overview

A Theory of Fiduciary Liability


Miller, Paul B., McGill Law Journal


The law of fiduciaries has been developed in an unprincipled manner. Consequently, the common law lacks a clear idea of the nature of the fiduciary relationship, the justification for fiduciary duties, and the purpose of fiduciary remedies. However, according to the author a principled theory of fiduciary liability may be derived from the common law. The focal point is the recent decision of the Supreme Court of Canada in Galambos v. Perez. The theory of liability suggested by Galambos and developed by the author is based on the conventional notion that fiduciary liability is premised upon the existence of a fiduciary relationship. The author argues that a clearer account of the nature and normative significance of the fiduciary relationship is critical to developing a sound understanding of the nature and scope of fiduciary duties. Under the theory developed by the author, the fiduciary relationship is treated as a distinctive kind of legal relationship. It is one in which one person (the fiduciary) wields discretionary power over the practical interests of another (the beneficiary). According to the author, fiduciary duties are explicable solely in terms of normatively salient qualities of the fiduciary relationship. The author explains these qualities and shows how they support and limit the incidence of fiduciary duties.

Le droit fiduciaire fut developpe sans principe directeur. Par consequent, la common law n'a pas d'idee claire de ce qu'est la nature de la relation fiduciaire, de la justification des obligations fiduciaires et de l'objectif des remedes fiduciaires. Toutefois, selon l'auteur, le principe theorique de la responsabilite fiduciaire provient peut-etre de la common law. L'element principal est le jugement recemment rendu par la Cour supreme du Canada dans Galambos c. Perez. La theorie de la responsabilite suggeree par Galambos et developpee par l'auteur est basee sur la notion conventionnelle selon laquelle la relation fiduciaire est la premisse sur laquelle l'existence d'une responsabilite fiduciaire est etablie. L'auteur tente de demontrer qu'une explication plus claire de la nature et de la signification normative de la relation fiduciaire est un element essentiel au developpement d'une comprehension informee de la nature et de la portee des obligations fiduciaires. Selon la theorie developpee par l'auteur, la relation fiduciaire est traitee comme etant une relation legale distincte. II s'agit d'une relation dans laquelle une personne (le fiduciaire) exerce un pouvoir discretionnaire sur les interets d'une autre personne (le beneficiaire). Selon l'auteur, les obligations fiduciaires dependent principalement des qualites normatives saillantes de la relation fiduciaires. L'auteur explique ces qualites et demontre comment ces dernieres supportent et limitent l'incidence des obligations fiduciaires.

Introduction

I. Approximate Approaches to Fiduciary Liability
   A. The Nature oldie Fiduciary Relationship
      1. Stares-Based Fiduciary Relationships
      2. Fact-Based Fiduciary Relationships
      3. Problems with the Status- and Fact-Based Approaches
   B. The Foundation of Fiduciary Obligation
      1. The Formation of Fiduciary Relationships
      2. The Basis of Fiduciary Duties
   C. The Nature and Scope of Fiduciary Obligation

II. An Emerging Theory of Fiduciary Liability
   A. The Nature of die Fiduciary Relationship
      1. The Fiduciary Relationship Defined
      2. Implications for file Status- and Fact-Based Approaches
   B. The Foundation of Fiduciary Obligation
      1. The Formation of Fiduciary Relationships
      2. The Basis of Fiduciary Duties
   C. The Nature and Scope of Fiduciary Obligation

III. Emendations and Amplification
   A. The Nature of the Fiduciary Relationship
      1. Moving Beyond die Status-and Fact-Based Approaches
      2. Amplifying the Definition of file Fiduciary Relationship
   B. The Foundation of Fiduciary Obligation
      1. … 

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