Abstract

https://ssrn.com/abstract=2917250
 


 



Liberty in Loyalty: A Republican Theory of Fiduciary Law


Evan J. Criddle


William & Mary Law School

February 15, 2017

Texas Law Review, Vol. 94, No. 6, 2017 Forthcoming

Abstract:     
Conventional wisdom holds that the fiduciary duty of loyalty is a prophylactic rule that serves to deter and redress harmful opportunism. This idea can be traced back to the dawn of modern fiduciary law in England and the United States, and it has inspired generations of legal scholars to attempt to explain and justify the duty of loyalty from an economic perspective. Nonetheless, this Article argues that the conventional account of fiduciary loyalty should be abandoned because it does not adequately explain or justify fiduciary law’s core features.

The normative foundations of fiduciary loyalty come into sharper focus when viewed through the lens of republican legal theory. Consistent with the republican tradition, the fiduciary duty of loyalty serves primarily to ensure that a fiduciary’s entrusted power does not compromise liberty by exposing her principal and beneficiaries to domination. The republican theory has significant advantages over previous theories of fiduciary law because it better explains and justifies the law’s traditional features, including the uncompromising requirements of fiduciary loyalty and the customary remedies of rescission, constructive trust, and disgorgement.

Significantly, the republican theory arrives at a moment when American fiduciary law stands at a crossroads. In recent years, some politicians, judges, and legal scholars have worked to dismantle two central pillars of fiduciary loyalty: the categorical prohibition against unauthorized conflicts of interest and conflicts of duty (the no-conflict rule), and the requirement that fiduciaries relinquish unauthorized profits (the no-profit rule). The republican theory explains why these efforts to scale back the duty of loyalty should be resisted in the interest of safeguarding liberty.

Number of Pages in PDF File: 66

Keywords: fiduciary, fiduciary duties, loyalty, republicanism, liberalism, domination, arbitrariness, remedies, rescission, constructive trust, disgorgement, agency, trust, guardianship, investment advice, corruption


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Date posted: February 15, 2017  

Suggested Citation

Criddle, Evan J., Liberty in Loyalty: A Republican Theory of Fiduciary Law (February 15, 2017). Texas Law Review, Vol. 94, No. 6, 2017 Forthcoming. Available at SSRN: https://ssrn.com/abstract=2917250

Contact Information

Evan J. Criddle (Contact Author)
William & Mary Law School ( email )
South Henry Street
P.O. Box 8795
Williamsburg, VA 23187-8795
United States
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