WHEN DOES A PARTY TO A BUSINESS AGREEMENT HAVE A DUTY TO DISCLOSE FACTS TO THE OTHER PARTY
November 23, 2012 – Business Law
Breach of Fiduciary Duty Any relationship existing between parties to an transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party.
One such relationship is that of agency
“Every agent owes his principal the duty of undivided loyalty. During the course of his agency, he may not undertake or participate in activities adverse to the interests of his principal…”
An agent is free to engage in competition with his principal after termination of his employment but he may plan and develop his competitive enterprise during the course of his agency only where the particular activity engaged in is not against the best interests of his principal…” (Sequoia Vacuum Systems v. Stransky)
Examples of Other Fiduciary Relationships
Real Estate Agent/Broker and Client; Stock Broker and Customer; Attorney and Client;
Partners; Joint Ventures; controlling shareholders and minority shareholders;
Corporate officers and directors on one hand and corporation and its shareholders on the other
Husband and wife with respect to the couple’s community property
Trustee and trust beneficiary; guardian and ward; pension fund trustee and pensioner beneficiary;
Executor and decedent’s estate; trustee and trust beneficiaries.