Common use of Requirements of Fiduciaries at Common Law Clause in Contracts

Requirements of Fiduciaries at Common Law. The common law imposes upon fiduciaries the duty to act in utmost good faith towards their beneficiaries. Fiduciaries must act toward their beneficiaries with a heightened sense of loyalty and fidelity. Fiduciaries must act in a manner consistent with the best interests of their beneficiaries in all matters related to the undertaking of trust and confidence. Fiduciaries must scrupulously avoid placing themselves in a position of conflict of interest. The general rule regarding conflicts of interests is that no one who has duties of a fiduciary nature is allowed to enter into engagements in which he has or can have a personal interest conflicting with the interests of those whom he is bound to protect. Even where the fiduciary acts in good faith, the foregoing restriction applies. A fiduciary cannot place his own interests ahead of those of his beneficiary, even in situations where the beneficiary benefits from the arrangement. A fiduciary cannot benefit personally from any opportunity which comes to his awareness by way of his fiduciary position. A fiduciary must not use any aspect of the beneficiary’s property for personal gain. More specifically, a fiduciary must not use for personal benefit a beneficiary’s assets, goods, information or opportunities. Fiduciaries must not use their position to benefit persons closely associated with them. Where a benefit is conferred upon a person with whom the fiduciary is closely associated, the fiduciary benefits indirectly. Regard must be had to all of the surrounding circumstances to determine whether a person is associated with a fiduciary. Persons sharing business relations or family relations will in most instances be characterized as associates of the fiduciary. In some instances, close personal relations will also give rise to an association between the fiduciary and the person. The key issue in determining whether a fiduciary is associated with another person is whether the fiduciary’s ability to represent the interests of the beneficiary is or appears to be compromised as a result of the fiduciary’s relationship with the third party.