Other Fiduciary Duties: Implementing Loyalty and Care

Abstract

This book chapter, prepared for the forthcoming Oxford Handbook of Fiduciary Law, canvasses the fiduciary duties other than the primary duties of loyalty and care. The core claim is that these other, subsidiary duties are field-specific elaborations of the primary duties of loyalty and care that implement those duties as applied to commonly recurring circumstances within the particular type or kind of fiduciary relationship. Together, the primary duties of loyalty and care, structured as open-ended standards, and the subsidiary duties, structured as rules or at least more specific standards, provide for fiduciary governance by a mix of rules, specific standards, and open-ended standards that mitigates the weaknesses of governance entirely by rules or standards alone. Fiduciary law thus improves on the familiar trope of rules versus standards as competing governance strategies. The increased specification provided by the subsidiary duties simplifies application of fiduciary obligation to cases that fall within their terms. But because the primary duties of loyalty and care remain operative, the specification for recurring matters provided by the subsidiary duties does not provide a roadmap for strategic avoidance behavior. If a fiduciary acts in a manner that is inimical to the principal’s interests and not addressed by a subsidiary duty, the principal may still invoke the open-ended primary duties of loyalty and care in challenging the fiduciary’s actions.

Keywords: fiduciary, duty of loyalty, duty of care, other fiduciary duties, rules, standards, governance

JEL Classification: K10, K36