Fiduciary Duty

Question 1

Fiduciary

Answer 1

• someone who stands in a special relationship of trust to another person, they have control over the decision of another person
• Applies to some professionals who are acting in a “trust” relationship with their clients
• ex – lawyer, doctor, parent, trustee

Question 2

Determining who is a fiduciary

Answer 2

(1) Has the scope for the exercise of some discretion or power
(2) Can unilaterally exercise that power or discretion to affect the beneficiary’s legal or practical interests
(3) The beneficiary is peculiary vulnerable to, or at the mercy of, the fiduciary holding the power or discretion

Question 3

Fiduciary Duties Owed

Answer 3

• Must place the beneficiary’s interest before their own interests
• Must not have a conflict of interest
• there can be a breach in fiduciary duty (this is separate from standard of care)

Question 4

Corporate Opporunity Doctrine

Answer 4

• A director/ officer – they act as a fiduciary, they cannot take a corporate opportunity for themselves
• Does not matter if the company itself was going to take advantage of the opportunity if they came across the opportunity in their capacity as officers/directors
• Duty may survive after the officer/ director leaves the company for a reasonable amount of time thereafter (must disgorge if made profits off another company’s ideas)

Question 5

Misrepresentation

Answer 5

Representation – any statement (written, verbal, or action) that is untrue

Question 6

Types of Misrepresentation

Answer 6

• Fraudulent
• Negligent
• Innocent

Question 7

Innocent Misrepresentation

Answer 7

representation that is neither fraudulent nor negligent

Question 8

Negligent Misrepresentation

Answer 8

• The plaintiff is told something by someone else and it is false, and they have relied on that information and then it fails
• carelessly untrue
  Ex – inspector says the furnace is fine and then the house burns down

Question 9

Negligent Misrepresentation Test

Answer 9

(1) A statement is made (must be of fact)
(2) The statement is false
(3) The maker of the statement must owe the hearer of the statement a duty of care
(4) The hearer of the statement must reasonably act on the statement
(5) The statement fell below the standard of care
(6) The hearer of the statement must suffer a loss as a result of their acting on the statement

Question 10

Fraudulent Misrepresentation

Answer 10

• intentionally untrue
• lie

Question 11

Fradulent Misrepresentation Test

Answer 11

(1) A statement is made (must be of fact)
(2) The statement is false
(3) The defendant knows the statement to be false
(4) The hearer of the statement must reasonably act on the statement
(5) The hearer of the statement must suffer a loss as a result of their acting on the statement