What is the scope of fiduciary duties in business transactions?
In Texas, fiduciary duty is a legal duty of one party to act in the best interest of another party in a business transaction. This duty generally consists of the obligation to act with the utmost loyalty and integrity in regards to the other party’s interests. It is a duty of trust and confidence that is based on the principles of fairness and good faith. In business transactions, fiduciary duties arise from a contract between two or more parties, an employer-employee relationship, or a partnership or joint venture agreement. Depending on the circumstances, the fiduciary may have a wide or narrow scope of duties. Generally, the scope of fiduciary duties includes the duty of loyalty, duty of care, duty of disclosure, duty of confidentiality, and duty of good faith. The duty of loyalty requires the fiduciary to act in the best interest of the other party, prioritize the other party’s interests over their own and avoid conflicts of interest. The duty of care requires the fiduciary to use due diligence and reasonable care in carrying out their responsibilities. The duty of disclosure requires the fiduciary to provide true and complete information to the other party. The duty of confidentiality requires the fiduciary to keep the other party’s information confidential. The duty of good faith requires the fiduciary to act in a manner that is free from fraud or bad faith. In summary, the scope of fiduciary duties in business transactions in Texas includes the duties of loyalty, care, disclosure, confidentiality, and good faith.
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