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http://ssrn.com/abstract=1737948
 
 

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Fencing Fiduciary Duties


Larry E. Ribstein (Deceased)


University of Illinois College of Law; PERC - Property and Environment Research Center

January 10, 2011

Boston University Law Review, Vol. 91, pp. 857-878, 2011
Illinois Program in Law, Behavior and Social Science Paper No. LBSS11-02
Illinois Public Law Research Paper No. 10-20

Abstract:     
This comment on the work of Professor Tamar Frankel builds on her encyclopedic discussion of the various types of duties that have been classified as "fiduciary." I argue for a more precise definition and more limited application of fiduciary duties which recognizes that their usefulness depends on their being limited and separated from other duties that apply in other settings. The fiduciary duty is appropriately construed as one of unselfishness, as distinguished from lesser duties of care, good faith and fair dealing, and to refrain from misappropriation. The fiduciary duty of unselfishness is appropriate only for a limited class of agency relationships in which the principal delegates open-ended power to the agent, and not for those who may exercise lesser power over the property of others, including co-investors, advisors, professionals, and those in confidential relationships. More broadly applying fiduciary duties could unnecessarily constrain parties from self-protection in contractual relationships, impose excessive litigation costs, provide an unsuitable basis for contracting, and impede developing fiduciary norms of behavior. This analysis of fiduciary duties helps address current issues, including those regarding the duties of brokers, dealers, and investment and mutual fund advisors. In short, fencing fiduciary duties protects both fiduciary and non-fiduciary relationships and enables parties to contract for the precise level of protection that is appropriate to the services they are purchasing. 

Number of Pages in PDF File: 24

JEL Classification: K22, K23, K42

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Date posted: January 12, 2011 ; Last revised: July 14, 2011

Suggested Citation

Ribstein (Deceased), Larry E., Fencing Fiduciary Duties (January 10, 2011). Boston University Law Review, Vol. 91, pp. 857-878, 2011; Illinois Program in Law, Behavior and Social Science Paper No. LBSS11-02; Illinois Public Law Research Paper No. 10-20. Available at SSRN: http://ssrn.com/abstract=1737948

Contact Information

Larry Edward Ribstein (Deceased) (Contact Author)
University of Illinois College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
217-244-9881 (Phone)
217-244-1478 (Fax)
PERC - Property and Environment Research Center
2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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