A fiduciary duty can be owed by one person to another or to an organization in many different ways. An executive at a business has an obligation to act in the best interests of that business, for example. A lawyer or an accountant has a fiduciary duty to their clients. These people need to make decisions that are in the best interests of another entity.
This also applies in the case of a business partner. They may have a fiduciary duty to their partner and to the business partnership itself.
How could this be breached?
This duty could be breached in many ways, usually when the business partner is accused of acting in their own best interests, even if it harms the company.
For example, a clear breach of fiduciary duty is the misappropriation of business assets. If a business partner has been using financial assets from the company for their own gain, they have prioritized themselves over the business. They may have also caused irreparable financial harm or held the business back significantly from what it could have accomplished.
A breach could also occur when making important decisions for the business. If a business partner is looking for a supplier and chooses a family member’s supply business over a cheaper and more efficient option, they may have breached their fiduciary duty. They have made a financial decision that helps their family member at the expense of the company.
Navigating a dispute
A breach of fiduciary duty is very significant and could even result in the dissolution of the partnership. While going through such a dispute, all involved need to understand their legal options.