How is a San Diego “Fiduciary” Different from a San Diego “Agent”?
In San Diego and all across California, businesses and even ordinary people hire and retain agents. Think, for example, about buying a house. You go online or make phone calls and hire a real estate agent. That person helps you look for a new house. Likewise, if you are selling a house, you hire an agent to find buyers.
With respect to businesses, every employee or person acting for the business is an agent. You give them tasks and work to do on behalf of and as agents for your business. California has a statutory definition codified at Cal. Civ. Code § 2295 which reads:
“An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.”
What is a California “Fiduciary”?
A “fiduciary” is also an agent, but a super agent, like James Bond 007 was not just a normal spy, but a super spy. If you hire or obtain for yourself or your business a fiduciary agent, then your fiduciary is duty bound to act with the utmost good faith for your benefit. This is a business equivalent of having a “best friend forever” in that you have confidence in the integrity of your fiduciary agent, you fully trust your fiduciary, and have no doubt of your fiduciary’s loyalty. On the flip side, your fiduciary agent wholly agrees and voluntarily and enthusiastically accepts your trust and confidence and will only act to your benefit and, personally for himself or herself, will take no advantage from what he or she does as your agent.
California courts have defined it in this manner: “A fiduciary relation in law is ordinarily synonymous with a ‘confidential relation.’ It is … founded upon the trust or confidence reposed by one person in the integrity and fidelity of another, and likewise precludes the idea of profit or advantage resulting from the dealings of the parties and the person in whom the confidence is reposed.” See Rickel v. Schwinn Bicycle Co., 144 Cal.App.3d 648 (Cal. App. 1983).
In the business setting, common examples of fiduciary relationships include:
- Directors and majority shareholders of a corporation
- Business partners
- Joint venturers
- Investment advisers and their clients
What Duties are Imposed on a Fiduciary?
Over the years, California judge-made common law and California statutes have mapped out the contours of the duties owed by San Diego fiduciary agents to their principals. Those duties are:
- Duty to act loyally for the principal’s beneﬁt
- Duty to act with undivided loyalty
- Duty not to acquire a material beneﬁt from a third party in connection with transactions conducted
- Duty not to acquire a material benefit from any actions taken on behalf of the principal
- Duty not to use the principal’s resources or the agent’s position for personal gain
- Duty not to compete with the principal
- Duty not to act for the benefit of or otherwise assist the principal’s competitors
- Duty not to use or communicate conﬁdential information of the principal for the agent’s own purposes or those of a third party
Violations of these duties by a fiduciary will make the fiduciary liable in California courts for breach of contract and for tort.
Contact San Diego Corporation Law Today
If you would like more information about agents and fiduciaries, about business contracts, business formation, or other aspects of business law, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. In 2017, Mr. Leonard has been named yet again a “Rising Star” by SuperLawyers.com. This is three years running. Mr. Leonard has the experience and knowledge to help your business succeed. Mr. Leonard can be reached at (858) 483-9200 or via email.