A fiduciary obligation does not require a contract. In fact, a duty imposed upon an agent by contract can be another cause of action related to breach of the trust agreement. Other times, such as in the context of an LLC, the fiduciary duty can be reduced or eliminated entirely through the Delaware LLC operating agreement.
In the situation where an LLC waives all fiduciary duties, the implied covenant of good faith and fair dealing remains. For corporations, trusts, and estates, generally, the fiduciary duty cannot be waived or eliminated. Plus, the waiver of duties is often strictly construed against the party asserting the duty has been waived.
The beneficial owner is the principal. The principal relies on the agent to use his or her expertise to perform a particular action, such as investing assets, operating a business, or making distributions. When the agent takes on the responsibilities of the relationship, then he or she automatically accepts the trust and responsibilities of a fiduciary.
Proving this breach requires an understanding of the intricacies of these types of cases.
The Williams Law Firm has experience both suing and defending agents acting as managers, directors, controlling stockholders, officers, executors, and trustees. The firm also has experience guiding agents in the performance of their duties through complex transactions and routine dealings.
For example, one strong defense available to the agent is the business judgment rule, which prevents corporate and LLC agents from being sued for poor management decisions, provided those decisions were made at the time on an informed basis and were not self-interested. In the event an LLC Operating Agreement waives fiduciary duties, that also limits recourse to the contractual duty of good faith and fair dealing. Other equitable defenses may include waiver, estoppel, acquiescence and laches.
The Williams Law Firm looks forward to seeing how we can put our experience to work for you.