Competing Accounts of Fiduciary Obligation

Research Handbook on Fiduciary Law (Andrew S. Gold & D. Gordon Smith, eds.) (Forthcoming)

23 Pages Posted: 29 Jun 2017

Date Written: June 14, 2017


Over the past several years, fiduciary scholars have developed several competing accounts of the fiduciary obligation. Studying these accounts leads to a more complete understanding of the fiduciary relationship and the obligations imposed on fiduciaries. In previous work, I presented an account of the fiduciary obligation as a duty by the fiduciary to adopt the principal’s ends. Under the “adopting” account, the fiduciary obligation can be viewed as a duty by the fiduciary to adopt the goals, objectives, or ends if the principal and act accordingly. This paper clarifies and extends the account, and it replies to objections raised by Professors Stephen Galoob and Ethan Leib. In contrast to the adopting account, Professors Galoob and Leib have articulated a “shaping” account of the fiduciary obligation. Under the shaping account, the fiduciary duty shapes the fiduciary’s deliberations vis-à-vis the principal and a fiduciary whose deliberations are not shaped in the way Professors Galoob and Leib describe does not comply with her fiduciary duty of loyalty. This paper maintains that the demands the shaping account places on a fiduciary are insufficient – they are inconsistent with fiduciary doctrine and with the custom and practice of fiduciaries. This paper also addresses objections posed by Professors Galoob and Leib, namely that the adopting account permits morally illicit ends and that it permits accidental compliance. Finally, this paper examines illustrations used by Professors Galoob and Leib to demonstrate that the adopting account is the more complete account of fiduciary obligation.

Keywords: fiduciary duty, fiduciary relationships, fiduciary obligation, duty of loyalty, duty of care

JEL Classification: K22, K23

Suggested Citation

Laby, Arthur B., Competing Accounts of Fiduciary Obligation (June 14, 2017). Research Handbook on Fiduciary Law (Andrew S. Gold & D. Gordon Smith, eds.) (Forthcoming), Available at SSRN:

Arthur B. Laby (Contact Author)

Rutgers Law School ( email )

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