The duty not to profit from a fiduciary position or put yourself in a conflict of interest (The fiduciary relationship and its obligations)-FS Flashcards
(10 cards)
What is the principal fiduciary duty concerning profit and conflict of interest?
A fiduciary must not make any unauthorised profit or place themselves in a position where their personal interests conflict with their duties to their principal.
Under what condition can a fiduciary profit or prioritise their own interest over the principal’s?
Only where the principal has given fully informed consent, can a fiduciary lawfully profit or prioritise their own interest.
What is the consequence if a fiduciary profits from a conflict of interest without consent?
The fiduciary will be accountable for any profit made and must return it to the principal.
Does it matter whether the fiduciary used their own money to make a profit from a conflict of interest?
No. Even if the fiduciary uses their own money, they are still liable if the opportunity arose from their fiduciary role.
What was the key legal principle established in Bray v Ford regarding fiduciaries?
It is an inflexible rule that a fiduciary is not allowed to profit from their role or place themselves in a position of conflict between interest and duty.
Can a fiduciary act on investment information acquired in their fiduciary role for personal benefit?
No. Using confidential or insider information gained through their fiduciary position for personal gain breaches their duty of loyalty.
What must a fiduciary do if a situation arises where their interest and duty may conflict?
They must prefer the interest of their principal over their own or abstain from acting, unless consent is given.
Is a breach of fiduciary duty avoided if the fiduciary acts only after the principal declines to act?
No. The conflict still exists, and any profit gained must still be accounted for, even if the principal chose not to proceed.
What is required for consent from a principal to be valid in allowing a fiduciary to act on conflicting interest?
The consent must be fully informed, meaning the principal must understand all material facts of the situation before giving permission.
Why is the duty to avoid conflict of interest considered “inflexible” in equity
Because trust and confidence are central to fiduciary roles, any opportunity for self-dealing or bias must be strictly avoided to preserve the integrity of the relationship.
