The Foundation for a Unified Theory of Fiduciary Relationships: ‘One May Not Contract with Oneself’

59 Pages Posted: 13 Apr 2014 Last revised: 11 Aug 2016

See all articles by Katsuhito Iwai

Katsuhito Iwai

The Japan Academy; The University of Tokyo; International Christian University

Date Written: August 5, 2016


This article presents a unified theory of fiduciary relationships based on the fundamental legal axiom that one may not contract with oneself. It characterizes fiduciary law as a law that imposes a duty of loyalty — an ethical duty to act solely for the sake of others — as a legally enforceable duty on a person (the fiduciary) forming a relationship with another (the beneficiary) that is socially desirable but would degenerate into a contract with oneself were that relationship contractually sustained. This article shows how the law solves this apparent muddling of ethics and law by placing the burden of proof on accused fiduciaries and relying on their unauthorized gains as verifiable lower-bound measures of beneficiaries’ lost expectations. It concludes, however, that fiduciary law’s primary function is not to replace but to complement ethics with law.

Keywords: Fiduciary, Contracts, Loyalty, Disgorgement, Ethics, Trust, Corporation, Agency, Professional Relations, Kant

JEL Classification: K00, K10, K12, K22, L12

Suggested Citation

Iwai, Katsuhito, The Foundation for a Unified Theory of Fiduciary Relationships: ‘One May Not Contract with Oneself’ (August 5, 2016). Available at SSRN: or

Katsuhito Iwai (Contact Author)

The Japan Academy ( email )

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The University of Tokyo ( email )

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International Christian University ( email )

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