Commercial Aspects of Trusts and Fiduciary Obligations

By Ewan McKendrick | Go to book overview

1
FIDUCIARY LAW AND THE MODERN COMMERCIAL WORLD

Paul Finn

There are five major issues of moment in contemporary fiduciary law. Four are of potential relevance to the concerns of this volume. The first, and seemingly perennial question, is that fundamental one: who is a fiduciary -- what is a fiduciary relationship?1 The second is the manner in which and the extent to which fiduciary principles should be applied to commercial relationships and dealings -- an issue which in one direction is calling into question the extent to which fiduciary obligations should be allowed to supplement those bargained for in negotiated commercial contracts,2 and in another, the use that can or should properly be made of fiduciary notions to achieve what is, in effect, a duty of good faith and fair dealing in contract formation, performance, and enforcement.3 The third, and in some ways the most intractable, is the proper role to be given fiduciary law in regulating the modern, multi-function business enterprise and the large professional partnership: this is the arena in which the issues of client-conflict, of secrecy and disclosure, of the efficacy of 'Chinese Walls and cones of silence' and the like, vex and threaten.4 The fourth is the product of the recent revitalization of the jurisdiction to award damages for breach of fiduciary duty5 and presages the development of what is, in effect, a surrogate tort of negligence. The final issue, which I merely mention, though it is not of immediate

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1
The writer has written on this matter at some length in T. G. Youdan (ed.), Equity, Fiduciaries and Trusts ( The Carswell Co., Toronto, 1989). ch. 1. The later decision of the Supreme Court of Canada in Lac Minerals Ltd. v. International Corona Resources Ltd. ( 1989) 61 DLR (4th) 14 has done little to clarify the question.
2
See e.g. E. Pfeiffer Weinkellerei-Weineinkauf GmbH & Co. v. Arbuthnot Factors Ltd. [ 1988] 1 WLR 151; Noranda Australia Ltd. v. Lachlan Resources N.L. ( 1988) 14 NSWLR 1.
3
This is less of an issue in Britain than in other common law countries given the relative disfavour shown in Britain to the imposition of duties of good faith and fair dealing on contracting parties: see P. D. Finn, "The Fiduciary Principle", in Youdan (ed.), supra, n. 1; see also Energy Law 90, 111-13 ( P. D. Finn), cf. 147-9 ( P. D. Rouse), International Bar Assoc., Graham & Trotman Ltd., London, 1990).
4
There has been a plethora of recent case law on these issues involving, in particular, the large law firm: see e.g. Re a firm of Solicitors [ 1992] 1 All ER353; MacDonald Estate v. Martin [ 1991] 1 WWR 705 (S.C. of Can.); National Mutual Holding Pty. Ltd. v. Sentry Corp. ( 1989) 87 A.L.R. 539.
5
See W. M. C. Gummow, "Compensation for Breach of Fiduciary Duty", in Youdan (ed.), supra, n. 1.

-7-

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