Fiduciary Relationships : Fiduciary Relationship

1348 Words6 Pages
I. Question 1 Courts have identified two categories of fiduciary relationships: The first is “inherently fiduciary” and the second is “fact-based”. The circumstances in which a fiduciary relationship would arise include: A. Undertaking of trust and confidence Mostly, fiduciary relationships involve an agreement where one party accepts from another on trust, the exercise of a power or discretion over his or her interests. The agreement does not need to be contractual. The key criterion is whether ‘one party is reasonably entitled to repose and does repose trust and confidence in another’. That is when any particular aspect of the agreement gives rise to an obligation of loyalty, beyond the contractual terms. B. Vulnerability Often a…show more content…
Moreover, a fiduciary relationship does not arise where one of the parties has failed to protect himself adequately. However, Mason J (dissent) found there was a limited fiduciary relationship. Although HPI was entitled to act in its own interests, it is not inconsistent with a fiduciary relationship if there is also an obligation to act in another’s interests. In contrast, the NZSC in Chrinside v Fay [2006] unanimously held the parties in a joint venture owed each other fiduciary duties. A joint venture with a view of sharing the profit is inherently fiduciary per Elias CJ. Further, when a joint venture had sufficiently advanced beyond mere discussion of possibilities to making plan, costing and implementing, it does amount to a relationship of fiduciary per Gault J. Moreover, most joint venture relationships can properly be regarded as being inherently fiduciary because of the analogy with partnerships per Tipping and Blanchard JJ. The key point is whether the relationship entitled one party to repose trust and confidence in the other party. In my view the New Zealand Supreme Court’s approach is more convincing. III. Question 3 There is a presumptive requirement that once a breach of fiduciary duty has been established the errant fiduciary must disgorge all profits made by dint of the breach. There are two main exceptions to that rule. First is where there has been some antecedent agreement for profit
Open Document